UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2023
Commission File Number 001-39476
GreenPower Motor Company Inc.
(Translation of registrant's name into English)
#240 - 209 Carrall Street, Vancouver, British Columbia V6B 2J2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SUBMITTED HEREWITH
Exhibit 99.1, Exhibit 99.2, Exhibit 99.3, Exhibit 99.4 and Exhibit 99.5 of this Form 6-K is incorporated by reference into, or as additional exhibits to, as applicable, the registrant's Registration Statements on Form F-10 (File No. 333-258099) and Form S-8 (No. 333-261422).
- 2 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GreenPower Motors Inc.
/s/ Michael Sieffert |
|
Michael Sieffert, Chief Financial Officer Date: July 17, 2023 |
GREENPOWER MOTOR COMPANY INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended March 31, 2023, 2022 and 2021
(Expressed in US dollars)
GREENPOWER MOTOR COMPANY INC.
Consolidated Financial Statements
(Expressed in US Dollars)
For the Years Ended March 31, 2023, 2022, and 2021
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Tel: (604) 688-5421 | BDO Canada LLP |
Fax: (604) 688-5132 | 1100 Royal Centre | |
www.bdo.ca | 1055 West Georgia Street, P.O. Box 11101 | |
Vancouver, British Columbia | ||
V6E 3P3 | ||
Report of Independent Registered Public Accounting Firm |
Shareholders and Board of Directors
GreenPower Motor Company Inc.
Vancouver, Canada
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of GreenPower Motor Company Inc. (the "Company") as of March 31, 2023, the related consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the year ended March 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023, and the results of its operations and its cash flows for the year ended March 31, 2023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BDO Canada LLP
Chartered Professional Accountants
We have served as the Company's auditor since fiscal 2023.
Vancouver, Canada
July 14, 2023
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Crowe MacKay LLP 1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687-4511 Fax +1 (604) 687-5805 www.crowemackay.ca |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of GreenPower Motor Company Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of GreenPower Motor Company Inc. and subsidiaries (the "Company") as of March 31, 2022, the related consolidated statements of operations and comprehensive loss, changes in equity (deficit) and cash flows for the years ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2022 and 2021, and the results of its operations and its cash flows for the years ended March 31, 2022 and 2021, and in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Emphasis of Matter Regarding Going Concern Uncertainty
We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Crowe MacKay LLP
Chartered Professional Accountants
We have served as the Company's auditor since 2011.
Vancouver, Canada
June 30, 2022
GREENPOWER MOTOR COMPANY INC. Consolidated Statements of Financial Position As of March 31, 2023 and 2022 (Expressed in US Dollars) |
||||||
March 31, 2023 | March 31, 2022 | |||||
Assets | ||||||
Current | ||||||
Cash and restricted cash (Note 4) | $ | 600,402 | $ | 6,888,322 | ||
Accounts receivable, net of allowances (Note 5) | 10,273,376 | 2,916,991 | ||||
Sales tax receivable | 133,530 | 89,511 | ||||
Current portion of finance lease receivables (Note 6) | 1,051,873 | 443,880 | ||||
Promissory note receivable (Note 7) | 159,171 | - | ||||
Inventory (Note 8) | 41,609,234 | 32,254,854 | ||||
Prepaids and deposits | 328,584 | 501,519 | ||||
54,156,170 | 43,095,077 | |||||
Non-current | ||||||
Finance lease receivables (Note 6) | 1,918,483 | 2,951,859 | ||||
Right of use assets (Note 9) | 4,845,738 | 116,678 | ||||
Property and equipment (Note 10, Note 21) | 2,604,791 | 3,443,317 | ||||
Other assets | 1 | 1 | ||||
$ | 63,525,183 | $ | 49,606,932 | |||
Liabilities | ||||||
Current | ||||||
Line of credit (Note 11) | $ | 6,612,232 | $ | 5,766,379 | ||
Accounts payable and accrued liabilities (Note 18) | 7,316,267 | 1,734,225 | ||||
Current portion of deferred revenue (Note 15) | 8,059,769 | 3,578,877 | ||||
Current portion of warranty liability (Note 19) | 535,484 | 313,517 | ||||
Loans payable to related parties (Note 18) | 3,287,645 | - | ||||
Current portion of lease liabilities (Note 9) | 669,040 | 120,609 | ||||
Current portion of deferred benefit of government assistance (Note 21) | 18,374 | - | ||||
Current portion of term loan (Note 21) | 1,467 | - | ||||
26,500,278 | 11,513,607 | |||||
Non-current | ||||||
Deferred revenue (Note 15) | 1,938,840 | 2,935,835 | ||||
Lease liabilities (Note 9) | 4,570,811 | - | ||||
Other liabilities | 34,265 | 42,831 | ||||
Term loan (Note 21) | 608,751 | - | ||||
Deferred benefit of government assistance (Note 21) | 667,967 | - | ||||
Warranty liability (Note 19) | 1,542,265 | 729,466 | ||||
35,863,177 | 15,221,739 | |||||
Equity | ||||||
Share capital (Note 12) | 75,528,238 | 70,834,121 | ||||
Reserves | 13,066,183 | 10,038,816 | ||||
Accumulated other comprehensive loss | (141,443 | ) | (128,436 | ) | ||
Accumulated deficit | (60,790,972 | ) | (46,359,308 | ) | ||
27,662,006 | 34,385,193 | |||||
$ | 63,525,183 | $ | 49,606,932 | |||
Nature and Continuance of Operations and Going Concern - Note 1 | ||||||
Events After the Reporting Period - Note 25 |
Approved on behalf of the Board on July 13, 2023
/s/ Fraser Atkinson | /s/ Mark Achtemichuk | |
Director | Director |
(The accompanying notes are an integral part of these consolidated financial statements)
GREENPOWER MOTOR COMPANY INC. Consolidated Statements of Operations and Comprehensive Loss For the Years Ended March 31, 2023, 2022, and 2021 (Expressed in US Dollars) |
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March 31, | March 31, | March 31, | |||||||
2023 | 2022 | 2021 | |||||||
Revenue (Note 22) | $ | 39,695,890 | $ | 17,236,773 | $ | 13,286,184 | |||
Cost of Sales | 32,445,836 | 13,360,068 | 9,706,044 | ||||||
Gross Profit | 7,250,054 | 3,876,705 | 3,580,140 | ||||||
Sales, general and administrative costs | |||||||||
Salaries and administration (Note 18) | 7,394,085 | 5,807,744 | 3,747,761 | ||||||
Depreciation (Notes 9 and 10) | 1,219,223 | 661,958 | 437,263 | ||||||
Product development costs | 2,090,338 | 1,381,101 | 939,949 | ||||||
Office expense | 920,468 | 419,398 | 325,324 | ||||||
Insurance | 1,801,665 | 1,244,505 | 596,932 | ||||||
Professional fees | 1,477,094 | 1,207,920 | 486,425 | ||||||
Sales and marketing | 818,289 | 686,544 | 234,445 | ||||||
Share-based payments (Notes 13 and 18) | 3,645,893 | 5,771,475 | 2,098,761 | ||||||
Transportation costs (Note 18) | 324,773 | 231,472 | 161,017 | ||||||
Travel, accomodation, meals and entertainment (Note 18) | 748,299 | 641,500 | 217,023 | ||||||
Allowance for credit losses (Notes 5 and 8) | 95,153 | 8,940 | 333,929 | ||||||
Total sales, general and administrative costs | 20,535,280 | 18,062,557 | 9,578,829 | ||||||
Loss from operations before interest, accretion and foreign exchange | (13,285,226 | ) | (14,185,852 | ) | (5,998,689 | ) | |||
Interest and accretion | (1,549,769 | ) | (515,668 | ) | (1,598,588 | ) | |||
Other Income (Note 10) | 72,867 | 364,296 | - | ||||||
Foreign exchange (loss) | (30,897 | ) | (65,117 | ) | (193,798 | ) | |||
Loss from operations for the year | (14,793,025 | ) | (14,402,341 | ) | (7,791,075 | ) | |||
Other item | |||||||||
Write down of assets (Note 5, 10 and 21) | (250,832 | ) | (607,579 | ) | (45,679 | ) | |||
Loss for the year | (15,043,857 | ) | (15,009,920 | ) | (7,836,754 | ) | |||
Other comprehensive income / (loss) | |||||||||
Cumulative translation reserve | (13,007 | ) | (39,413 | ) | 21,169 | ||||
Total comprehensive loss for the year | $ | (15,056,864 | ) | $ | (15,049,333 | ) | $ | (7,815,585 | ) |
Loss per common share, basic and diluted | $ | (0.64 | ) | $ | (0.69 | ) | $ | (0.43 | ) |
Weighted average number of common shares outstanding, basic and diluted | 23,522,755 | 21,877,488 | 18,116,129 |
(The accompanying notes are an integral part of these consolidated financial statements)
GREENPOWER MOTOR COMPANY INC.
Consolidated Statements of Changes in Equity
For the Years ended March 31, 2023, 2022 and 2021
(Expressed in US Dollars)
Share Capital | Equity portion | Accumulated other | |||||||||||||||||||
Number of | of convertible | comprehensive | Accumulated | ||||||||||||||||||
Common shares | Amount | debentures | Reserves | income (loss) | Deficit | Total | |||||||||||||||
Balance, March 31, 2020 | 15,486,750 | $ | 16,892,725 | $ | 379,506 | $ | 5,515,639 | $ | (110,192 | ) | $ | (23,852,634 | ) | $ | (1,174,956 | ) | |||||
Shares issued for cash | 1,885,000 | 37,700,000 | - | - | - | - | 37,700,000 | ||||||||||||||
Share issuance costs | - | (2,948,718 | ) | - | - | - | - | (2,948,718 | ) | ||||||||||||
Shares issued for exercise of warrants | 1,672,028 | 5,357,775 | - | (772,408 | ) | - | - | 4,585,367 | |||||||||||||
Shares issued for conversion of debentures | 1,703,240 | 3,720,199 | (315,506 | ) | - | - | - | 3,404,693 | |||||||||||||
Reclassify matured convertible debentures not converted | - | - | (64,000 | ) | - | - | 64,000 | - | |||||||||||||
Shares issued for exercise of options | 145,537 | 467,755 | - | (164,869 | ) | - | - | 302,886 | |||||||||||||
Share-based payments | - | - | - | 2,098,761 | - | - | 2,098,761 | ||||||||||||||
Cumulative translation reserve | - | - | - | - | 21,169 | - | 21,169 | ||||||||||||||
Net loss for the year | - | - | - | - | - | (7,836,754 | ) | (7,836,754 | ) | ||||||||||||
Net fractional shares as a result of share consolidation | 5 | - | - | - | - | - | - | ||||||||||||||
Balance, March 31, 2021 | 20,892,560 | $ | 61,189,736 | $ | - | $ | 6,677,123 | $ | (89,023 | ) | $ | (31,625,388 | ) | $ | 36,152,448 | ||||||
Share issuance costs | - | (27,329 | ) | - | - | - | - | (27,329 | ) | ||||||||||||
Shares issued for exercise of warrants | 1,925,656 | 7,305,834 | - | (994,161 | ) | - | - | 6,311,673 | |||||||||||||
Shares issued for exercise of options | 329,822 | 2,365,880 | - | (1,139,621 | ) | - | - | 1,226,259 | |||||||||||||
Fair value of stock options forfeited | - | - | - | (276,000 | ) | - | 276,000 | - | |||||||||||||
Share-based payments | - | - | - | 5,771,475 | - | - | 5,771,475 | ||||||||||||||
Cumulative translation reserve | - | - | - | - | (39,413 | ) | - | (39,413 | ) | ||||||||||||
Net loss for the year | - | - | - | - | - | (15,009,920 | ) | (15,009,920 | ) | ||||||||||||
Balance, March 31, 2022 | 23,148,038 | $ | 70,834,121 | $ | - | $ | 10,038,816 | $ | (128,436 | ) | $ | (46,359,308 | ) | $ | 34,385,193 | ||||||
Shares issued for cash | 1,565,268 | 4,895,826 | - | - | - | - | 4,895,826 | ||||||||||||||
Share issuance costs | - | (216,803 | ) | - | - | - | - | (216,803 | ) | ||||||||||||
Shares issued for exercise of options | 3,322 | 15,094 | - | (6,333 | ) | - | - | 8,761 | |||||||||||||
Fair value of stock options forfeited | - | - | - | (612,193 | ) | - | 612,193 | - | |||||||||||||
Share-based payments | - | - | - | 3,645,893 | - | - | 3,645,893 | ||||||||||||||
Cumulative translation reserve | - | - | - | - | (13,007 | ) | - | (13,007 | ) | ||||||||||||
Net loss for the year | - | - | - | - | - | (15,043,857 | ) | (15,043,857 | ) | ||||||||||||
Balance, March 31, 2023 | 24,716,628 | $ | 75,528,238 | $ | - | $ | 13,066,183 | $ | (141,443 | ) | $ | (60,790,972 | ) | $ | 27,662,006 |
(The accompanying notes are an integral part of these consolidated financial statements)
GREENPOWER MOTOR COMPANY INC. Consolidated Statements of Cash Flows For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
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March 31, | March 31, | March 31, | |||||||
2023 | 2022 | 2021 | |||||||
Cash flows from (used in) operating activities | |||||||||
Loss for the year | $ | (15,043,857 | ) | $ | (15,009,920 | ) | $ | (7,836,754 | ) |
Items not affecting cash | |||||||||
Allowance for credit losses | 95,153 | 8,940 | 333,929 | ||||||
Depreciation | 1,219,223 | 661,958 | 437,263 | ||||||
Share-based payments | 3,645,893 | 5,771,475 | 2,098,761 | ||||||
Accretion and accrued interest | 826,584 | (7,034 | ) | 168,029 | |||||
Amortization of deferred financing fees | - | 416,738 | 628,483 | ||||||
Write down of assets | 250,832 | 607,579 | 45,679 | ||||||
Other income | (72,867 | ) | (365,278 | ) | - | ||||
Foreign exchange loss | 30,897 | 65,117 | 193,798 | ||||||
(9,048,142 | ) | (7,850,425 | ) | (3,930,812 | ) | ||||
Changes in non-cash items: | |||||||||
Accounts receivable | (7,333,292 | ) | 1,478,425 | (3,492,997 | ) | ||||
Sales tax receivable | (44,019 | ) | 2,244 | (58,362 | ) | ||||
Inventory | (8,940,692 | ) | (20,864,478 | ) | (8,757,529 | ) | |||
Prepaids and deposits | 172,935 | (73,373 | ) | (401,063 | ) | ||||
Finance lease receivables | 425,383 | 287,947 | 22,771 | ||||||
Accounts payable and accrued liabilities | 5,816,192 | 192,973 | 272,318 | ||||||
Deferred revenue | 3,158,930 | 6,389,707 | (301,152 | ) | |||||
Warranty liability | 1,034,766 | 93,232 | 254,604 | ||||||
(14,757,939 | ) | (20,343,748 | ) | (16,392,222 | ) | ||||
Cash flows from (used in) investing activities | |||||||||
Proceeds from disposal of property and equipment, net of fees | 874,184 | - | - | ||||||
Purchase of property and equipment | (355,993 | ) | (536,093 | ) | (352,682 | ) | |||
Lion truck body business combination | (215,000 | ) | - | - | |||||
303,191 | (536,093 | ) | (352,682 | ) | |||||
Cash flows from (used in) financing activities | |||||||||
Paycheck protection program proceeds | - | - | 361,900 | ||||||
Repayment of loans payable to related parties | - | - | (2,803,863 | ) | |||||
Loans from related parties | 3,043,734 | - | 137,074 | ||||||
Proceeds from (repayment of) line of credit | 845,853 | 5,766,379 | (5,469,944 | ) | |||||
Proceeds from promissory note | 15,055 | - | - | ||||||
Principal payments on promissory note | - | (346,166 | ) | (58,030 | ) | ||||
Principal payments on lease liabilities | (394,580 | ) | (266,042 | ) | (272,467 | ) | |||
Proceeds from issuance of common shares | 4,895,826 | - | 37,700,000 | ||||||
Repayment of note payable and convertible debentures, net of conversion | - | - | (10,574 | ) | |||||
Repayment of other liabilities | (8,566 | ) | - | - | |||||
Equity offering costs | (216,803 | ) | (27,329 | ) | (2,948,718 | ) | |||
Proceeds from exercise of stock options | 8,761 | 1,226,259 | 302,886 | ||||||
Proceeds from exercise of warrants | - | 6,311,673 | 4,585,367 | ||||||
8,189,280 | 12,664,774 | 31,523,631 | |||||||
Foreign exchange on cash and restricted cash | (22,452 | ) | (104,559 | ) | (22,384 | ) | |||
Net increase (decrease) in cash and restricted cash | (6,287,920 | ) | (8,319,626 | ) | 14,756,343 | ||||
Cash and restricted cash, beginning of year | 6,888,322 | 15,207,948 | 451,605 | ||||||
Cash and restricted cash, end of year | $ | 600,402 | $ | 6,888,322 | $ | 15,207,948 |
Supplemental Cash Flow Disclosure Note 24
(The accompanying notes are an integral part of these consolidated financial statements)
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
1. Nature and Continuance of Operations and Going Concern
GreenPower Motor Company Inc. ("GreenPower" or the "Company") was incorporated in the Province of British Columbia on September 18, 2007. The Company is a manufacturer and distributor of purpose-built, all-electric, zero-emission medium and heavy-duty vehicles serving the cargo and delivery market, shuttle and transit space and school bus sector.
The Company's corporate office is located at Suite 240-209 Carrall St., Vancouver, Canada.
The consolidated financial statements were approved by the Board of Directors on July 13, 2023.
These consolidated financial statements have been prepared on the basis that the Company is a going concern, meaning that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities inthe normal course of operations.
The Company's operations are dependent upon its ability to raise capital and generate cash flows. As at March 31, 2023, the Company had a cash balance of $600,402, working capital, defined as current assets less current liabilities, of $27,655,892, accumulated deficit of ($60,790,972), shareholders' equity of $27,662,006, and the Company recorded a loss of ($15,043,857) for the year ended March 31, 2023. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The continuation of the Company as a going concern is dependent on future cash flows from operations including the successful sale and manufacture of electric buses to achieve a profitable level of operations and obtaining necessary financing to fund ongoing operations. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern. Management plans to address this material uncertainty by selling vehicles in inventory, collecting accounts receivable, utilizing the Company's operating line of credit and, from time to time, and at its discretion, selling common shares through the Company's At the Market Equity offering ("ATM").
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies
(a) Basis of presentation
Statement of Compliance with IFRS
These annual consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and the interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). These consolidated financial statements are presented on a historical cost basis, except for financial instruments classified as fair value through profit or loss ("FVTPL") or as fair value through other comprehensive income ("FVOCI"), in U.S. dollars. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting,except for cash flow information. The preparation of these consolidated financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
(b) Basis of consolidation
These consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries:
Name of | Country of | Ownership | Ownership | Principal |
Subsidiary | Incorporation | 31-Mar-23 | 31-Mar-22 | Activity |
GP GreenPower Industries Inc. | Canada | 100% | 100% | Holding company |
GreenPower Motor Company, Inc. | United States | 100% | 100% | Electric bus manufacturing and distribution |
0939181 BC Ltd. | Canada | 100% | 100% | Electric bus sales and leasing |
San Joaquin Valley Equipment Leasing, Inc. | United States | 100% | 100% | Electric bus leasing |
0999314 BC Ltd. | Canada | 100% | 100% | Inactive |
Electric Vehicle Logistics Inc. | United States | 100% | 100% | Vehicle Transportation |
GreenPower Manufacturing WV Inc. | United States | 100% | 100% | Electric bus manufacturing and distribution |
Lion Truck Body Incorporated | United States | 100% | 100% | Truck body manufacturing |
Gerui New Energy Vehicle (Nanjing) Co., Ltd. | China | 100% | N/A | Electric bus manufacturing and distribution |
EA Green-Power Private Ltd. | India | 100% | 100% | Electric bus manufacturing and distribution |
All intercompany balances, transactions, revenues and expenses are eliminated upon consolidation. Certain information and note disclosures which are considered material to the understanding of the Company's consolidated financial statements are provided below.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(c) Financial instruments
Classification
IFRS 9 requires a company to classify its financial instruments based on the way they are measured, into one of three categories: Amortized Cost, FVTPL, and FVOCI. In determining the appropriate category for financial assets, a company must consider whether it intends to hold the financial assets and collect the contractual cash flows or to collect the cash flows and sell financial assets (the "business model test") and whether the contractual cash flows of an asset are solely payments of principal and interest (the "SPPI test").
i. Amortized Cost
All of the Company's financial instruments, initially recognized at fair value, are subsequently measured at amortized cost using the effective interest method. Transaction costs are included in the initial fair value measurement of the financial instruments, and the Company incorporates the expected creditloss in financial assets on a forward-looking basis. The Company will, at a minimum, recognize 12 month expected losses in profit or loss, and if a significant increase in credit risk occurs after initial recognition, lifetime expected losses will be recognized.
Subsequent to the initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. Interest, dividends, losses and gains relating to the financial liability are recognized in profit or loss. When the conversion option is exercised, the carrying amount of the liability is recorded as share capital and the equity component of the compound financial instrument is transferred to share capital.
ii. FVTPL
Financial liabilities classified as FVTPL are measured at fair value with unrealized gains and losses recognized through the Consolidated Statements of Operations. The Company did not have any liabilities classified as FVTPL as at March 31, 2023 and March 31, 2022.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(c) Financial instruments (continued)
Derivative financial assets and liabilities are initially recognized at their fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value at each reporting period with changes in the fair value recognized in profit and loss. Derivative financial assets and liabilities include warrants purchased or issued by the Company denominated in a currency other than the Company's functional currency. As at March 31, 2023 and March 31, 2022, the Company did not have any derivative financial assets or liabilities.
iii. FVOCI
Certain debt instrument assets must be classified as FVOCI unless the option to FVTPL is taken and the FVOCI classification is an election for equity assets. The Company did not have any debt or equity assets classified as FVOCI as at March 31, 2023 and March 31, 2022.
For debt instruments measured at FVOCI, interest income (calculated using the effective interest method), foreign currency gains or losses and impairment gains or losses are recognized directly in profit or loss. The difference between cumulative fair value gains or losses and the cumulative amounts recognized in profit or loss is recognized in OCI until derecognition, when the amounts in OCI are reclassified to profit or loss. For equity instruments designated as FVOCI only dividend income is recognized in profit or loss with all other gains and losses recognized in OCI and there is no reclassification on derecognition.
Measurement
All of the Company's financial instruments, initially recognized at fair value, are subsequently measured at amortized cost using the effective interest rate method. Transaction costs are included in the initial fair value measurement of the financial instruments.
Impairment
The Company assesses on a forward-looking basis the expected credit loss associated with financial assets measured at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables, which is recorded as an allowance for credit losses. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. As at March 31, 2023 the Company recognized an allowance for credit losses of $139,370 (2022 - $44,579) against its accounts receivable (Note 4).
For financial assets that are measured at amortized cost, the Company will, at a minimum, recognize 12 month expected losses in profit or loss, calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.
Lifetime expected losses will be recognized on assets for which there is a significant increase in credit risk after initial recognition. During the year ended March 31, 2023 the Company recognized an impairment of nil on accounts receivables (2022 - $43,261).
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(d) Cash and cash equivalents
Cash and cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less and are subject to an insignificant risk of change in value. As at March 31, 2023 and March 31, 2022 the Company had no cash equivalents.
(e) Revenue recognition
The majority of the Company's contracts have a single performance obligation, which is the delivery and acceptance of goods, including electric vehicles, vehicle parts, and completed truck bodies. The Company recognizes revenue from these contracts with customers when a customer obtains control of the goods or services, and the Company satisfies its performance obligation to customers in exchange for consideration the Company expects to receive, net of discounts and taxes. Revenue for these contracts is allocated to the single performance obligation, which is the transfer and acceptance of the asset, including vehicles, vehicle parts, and completed truck bodies.
The Company has also recognized revenue from a contract under which the Company was reimbursed for certain costs incurred on a project over time. This revenue was recognized over the period earned, in accordance with the terms of the Contract. The Company has also earned vehicle transportation revenue, which is recognized when the transportation is completed. The Company is a lessor under certain lease contracts involving GreenPower all-electric vehicles. The recognition of lease revenue is discussed in note 2. (q).
When the period between the receipt of consideration and revenue recognition is greater than one year, the Company determines whether the financing component is significant to the contract. Where a contract is determined to have a significant financing component, the transaction price is adjusted to reflect the financing. The discount rate used in adjusting the promised amount of consideration is the rate that would be reflected in a separate financing transaction between the Company and the customer at contract inception. This rate is not subsequently adjusted for any other changes over the contract term.
The Company would recognize an asset for the incremental costs of obtaining a contract with a customer if it expects the costs to be recoverable and has determined that such costs meet the requirements to be capitalized. Capitalized contract acquisition costs are amortized consistent with the pattern of transfer to the customer for the goods and services to which the asset relates. The Company does not capitalize incremental costs of obtaining contracts if the amortization period is one year or less.
(f) Impairment of long-lived assets
At the end of each reporting period, the Company's assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the Consolidated Statements of Operations for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(f) Impairment of long-lived assets (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Consolidated Statements of Operations.
(g) Foreign currency translation
The consolidated entities and their respective functional currencies are as follows:
Entity | Functional Currency |
GreenPower Motor Company Inc. (parent) | U.S. Dollar |
GP GreenPower Industries Inc. | Canadian Dollar |
GreenPower Motor Company, Inc. | U.S. Dollar |
0939181 BC Ltd. | Canadian Dollar |
San Joaquin Valley Equipment Leasing, Inc. | U.S. Dollar |
0999314 B.C. Ltd. | Canadian Dollar |
Electric Vehicle Logistics Inc. | U.S. Dollar |
GreenPower Manufacturing WV Inc. | U.S. Dollar |
Lion Truck Body Incorporated | U.S. Dollar |
EA GreenPower Private Ltd. | U.S. Dollar |
Gerui New Energy Vehicle (Nanjing) Co. Ltd. | RMB |
Translation to functional currency
Foreign currency transactions are translated into U.S. dollars using exchange rates in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the measurement date. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the historical exchange rate or the exchange rate in effect at the measurement date for items recognized at FVTPL. Gains and losses arising from foreign exchange are included in the Consolidated Statements of Operations.
Translation to presentation currency
The results and financial position of those entities with a functional currency different from the presentation currency are translated into the presentation currency as follows:
- assets and liabilities are translated at the closing rate at the date of the Statements of Financial Position;
- income and expenses are translated at average exchange rates; and
- all resulting exchange differences are recognized in accumulated other comprehensive income/loss.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(g) Foreign currency translation
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising on translation of foreign operations are recognized in accumulated other comprehensive income / loss. On disposal of a foreign operation (that is, a disposal of the Company's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation) all exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Company are reclassified from accumulated other comprehensive income/loss to net income/loss for the period.
(h) Inventory
Vehicle inventory is recorded at the lower of average cost and net realizable value with cost determined by vehicle model in accordance with standard input costs which are reviewed and updated over time based on actual costs. Parts inventory is valued at the lower of cost and net realizable value. WIP inventory is valued based on actual costs incurred to bring the WIP to its current state of completion. The Company's inventory consists of work in process (including electric vehicles and truck bodies), parts, and finished goods. In determining net realizable value for new vehicles, the Company considers the cost, the average age of the vehicles, and recent sales of the same or similar models from inventory. For used vehicles, the Company considers the value of new inventory and compares this to the age and condition of used inventory, as well as sales (including leases) of same or similar used inventory, where available.
(i) Property, plant, and equipment
Property, plant and equipment ("PPE") are carried at cost, less accumulated depreciation and accumulated impairment losses. The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Depreciation is provided at rates calculated to write off the cost of PPE, less their estimated residual value, using the following rates/estimated lives and methods:
Leasehold improvements | Straight line over term of lease or economic life |
Computers | 3 years, straight line method |
EV equipment | 3 years, straight line method |
Furniture | 7 years, straight line method |
Automobiles | 5-10 years, straight line method |
Leased asset | 12 years, straight line method |
Buses | 12 years, straight line method |
An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the Consolidated Statements of Operations. Where an item of PPE comprises major components with different useful lives, the components are accounted for as separate items of PPE. Expenditures incurred to replace a component of an item of PPE is accounted for separately, including major inspection and overhaul expenditures are capitalized.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(j) Loss per share
The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti- dilutive. GreenPower's loss per common share, basic and diluted, for the year ended March 31, 2023 was $(0.64), (2022 - $(0.69), 2021 - $(0.43)), and excludes stock options (Note 13), and warrants (Note 14) from the calculation of diluted EPS for each period, as their effect would be anti-dilutive.
(k) Share capital
Common shares are classified as equity. Finder's fees and other related share issue costs, such as legal, regulatory, and printing, on the issue of the Company's shares are charged directly to share capital, net of any tax effects.
(l) Income taxes
Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net income/loss except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.
Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current period and any adjustment to income taxes payable in respect to previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits, and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period the Company will reassess deferred tax assets. The Company will recognize a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
(m) Share-based payment transactions
The Company grants share-based awards to certain officers, employees, directors and other eligible persons. The fair value of the equity-settled awards is determined at the date of the grant. In calculating fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value is determined by using the Black-Scholes option pricing model. At each financial reporting date, the cumulative expense representing the extent to which the vesting period has expired and management's best estimate of the awards that are ultimately expected to vest is computed. The movement in cumulative expense is recognized in the Consolidated Statements of Operations with a corresponding entry against the related equity settled share-based payments reserve account over the vesting period. No expense is recognized for awards that do not ultimately vest. If the awards expire unexercised, the related amount remains in share-option reserve.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(m) Share-based payment transactions
Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the Consolidated Statements of Operations, unless they are related to the issuance of shares. Amounts related to the issuance of shares are recorded as a reduction of share capital. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model. The fair value of stock options granted to non-employees is re-measured at the earlier of each financial reporting or vesting date, and any adjustment is charged or credited to operations upon re-measurement.
(n) Government grants and vouchers
Government vouchers are recognized in revenue when there is reasonable assurance that the voucher will be received and the Company will comply with all required conditions. Those vouchers without specified future performance conditions are recognized in income when the voucher proceeds are receivable.
A grant that imposes specified future performance conditions is recognized in income when those conditions are met. Government grants in the form of forgivable loans, or other forms of government grants or assistance, are evaluated in accordance with IAS 20 and are recognized when there is reasonable assurance that the Company will meet the terms of the government grant or assistance.
(o) Provisions and contingent liabilities
Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.
(p)Leases
Definition of a lease
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has elected to apply the practical expedient to account for leases for which the lease term ends within 12 months of the date of initial application and leases of low value assets as short-term leases. The lease payments associated with these leases are recognized as expenses on a straight-line basis over the lease term.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(p) Leases (continued) As a lessee
The Company recognizes a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, based on the initial amount of the lease liability. The assets are depreciated to the earlier of the end of the useful life of the right of use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readilydetermined, at the Company's incremental borrowing rate.
The ongoing lease liability is measured at amortized cost using the effective interest method. It is re- measured when there is a change in future lease payments, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way a corresponding adjustment is made to the carrying amount of the right of use asset or is recorded in profit or loss if the carrying amount of the right of use asset has been reduced to zero.
As a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset. If an arrangement contains non-lease components, the Company applies IFRS 15 to allocate the consideration in the contract.
Amounts due from lessees under finance leases are recorded as finance lease receivables at the amount of the Company's net investment in the leases. Finance lease income is recognized as revenue by allocating the lease income to accounting periods so as to reflect a constant periodic rate of return on the Company's net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term, included in Revenue in the consolidated statements of operations and comprehensive loss.
(q) Goodwill and Impairment
The Company is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows. During the year, GreenPower acquired Lion Truck Body Inc., and recorded goodwill of $250,832 on the acquisition (Note 21). This goodwill was tested at year-end, and was not supported by the estimated future cash flows of the business, and that the $250,832 of goodwill from the acquisition was impaired and was therefore written off.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(r) Adoption of accounting standards
Certain new accounting standards have been published by the IASB or the IFRS Interpretations Committee that are effective for annual reporting periods beginning on or after January 1, 2022. These changes were reviewed by management and did not cause a change to the Company's financial statements.
(s) Future accounting pronouncements
Certain new accounting standards and interpretations have been published by the IASB that are not mandatory for the March 31, 2023 reporting period, as summarized in the following table:
Mandatorily effective for periods beginning on or after January 1, 2023 | Mandatorily effective for periods beginning on or after January 1, 2024 |
IFRS 17 - Insurance Contracts | IFRS 16 - Leases (liability in a sale and leaseback) |
IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 (Disclosure of Accounting Policies) | IAS 1 - Presentation of Financial Statements (classification of liabilities as current or non current) |
IAS 8 - Accounting policies, Changes in Accounting Estimates and Errors (Definition of Accounting Estimates) | IAS 1 - Presentation of Financial Statements (Non current liabilities with covenants) |
IAS 12 - Income taxes (Deferred tax related to assets and liabilities arising from a single transaction) |
The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
3. Critical accounting estimates and judgements
The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to critical accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
i. The determination of the functional currency the Company and of each entity within the consolidated Company (Note 2. g.).
ii. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern (Note 1).
Critical accounting estimates and assumptions
i. The determination of the discount rates used to discount the promissory note receivable (Note 7), term loan (Note 21), the deferred benefit of government assistance (Note 21), finance lease receivables (Note 6) and lease liabilities (Note 8)
ii. The estimated accrual rate for the warranty provision on the sale of all-electric vehicles (Note 19)
iii. The classification of leases as either financial leases or operating leases (Note 9, Note 2 p.).
iv. The determination that the Company is not involved in any legal matters that require a provision (Note 23)
v. The determination of an allowance for doubtful accounts on the Company's trade receivables (Note 5)
vi. The valuation of tangible assets and financial liabilities acquired in the Lion Truck Body (LTB) Inc. transaction and the determination that $250,832 in goodwill from the acquisition of Lion Truck Body Inc. was impaired as at March 31, 2023, and was written off (Note 21)
vii. The estimate of the useful life of equipment (Note 2.i, Note 10)
viii. The estimate of the net realizable value of inventory (Note 8)
ix. The estimated value of the deferred benefit of government assistance (Note 21)
x. Estimates underlying the recognition of proceeds from government vouchers and grants (Note 2. n.)
xi. Estimates underlying the determination of the carrying value of the West Virginia lease liability and right of use asset (Note 9)
xii. Estimates underlying the calculation of deferred income tax assets and deferred income tax recovery (Note 20)
xiii. The determination of overheads to be allocated to inventory and charged to cost of sales (Note 8)
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
4. Cash and Restricted Cash
As at March 31, 2023 the Company has a cash balance of $600,402 and as at March 31, 2022 the Company had a cash and restricted cash balance of $6,888,322, which is comprised of cash totaling $884,784 and restricted cash of $5,949,985 associated with deposits under a customer contract and restricted cash of $53,553 related to a contract for the sale of vehicles that was returned to the Company in June 2022. Both of these amounts were on deposit at major financial institutions in the United States. The Company has no cash equivalents as at March 31, 2023 or at March 31, 2022.
5. Accounts Receivable
The Company has evaluated the carrying value of accounts receivable as at March 31, 2023 in accordance with IFRS 9 and has determined that an allowance against accounts receivable of $139,370 as at March 31, 2023 (2022 - $44,579) is warranted. During the year ended March 31, 2023 $ nil (2022 - $43,261) in accounts receivable associated with one customer was written down due to an increase in credit risk. As at March 31, 2023 the Company had an accounts receivable net of allowances balance of $10,273,376 (2022 - $2,916,991). Two customers (2022 - 3 customers) each represented more than 10% of this balance, and these customers in aggregate represented 67% (2022 - 76%) of the balance.
March 31, 2023 | March 31, 2022 | |||||
Allowance for doubtful accounts, beginning of year | $ | 44,579 | $ | 35,639 | ||
plus: new allowance recognized | 139,370 | 44,579 | ||||
less: allowance collected | (44,579 | ) | (35,639 | ) | ||
Allowance for doubtful accounts, end of year | $ | 139,370 | $ | 44,579 |
6. Finance Lease Receivables
GreenPower's wholly owned subsidiary San Joaquin Valley Equipment Leasing Inc. ("SJVEL") leases vehicles to several customers, and as at March 31, 2023 the Company had a total of 45 (2022 - 48) vehicles on lease that were determined to be finance leases, and the Company had a total of 1 (2022 - 1) vehicle on lease that was determined to be an operating lease. During the year ended March 31, 2023 finance leases for three vehicles reached their maturity date and the lessee purchased two of the vehicles. The lessee did not pay for one of the three vehicles, and subsequent to the end of the year this vehicle was repossessed (Note 24).
During the year ended March 31, 2022, the Company entered into a mutual release agreement with the lessee of 28 vehicles which were accounted for as finance leases, where SJVEL subsequently sold the vehicles to a third party, and one mutual release for an EV 250 (2021-nil) that is now classified as Property Plant and Equipment. For operating leases, lease payments are recognized in revenue when earned.
Subsequent to the year ended March 31, 2023 GreenPower provided a notice of default to a lessee of 37 vehicles, and the defaults were not cured so the leases were terminated and the vehicles were repossessed (Note 25).
For the year ended March 31, 2023, selling profit on finance leases was $nil (2022 - $725,814, 2021 - $2,533,833).
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
6. Finance lease receivables (continued)
The following table illustrates Finance Lease Receivables as at March 31, 2023 and as at March 31, 2022:
March 31, 2023 | March 31, 2022 | |||||
Finance lease receivable, beginning of year | $ | 3,395,739 | $ | 3,922,391 | ||
Investment recognized | - | 1,150,360 | ||||
Investment derecognized | - | (1,389,065 | ) | |||
Lease payments received | (695,825 | ) | (511,000 | ) | ||
Interest income recognized | 270,442 | 223,053 | ||||
Finance lease receivable, end of year | $ | 2,970,356 | $ | 3,395,739 | ||
Current portion of Finance Lease Receivable | $ | 1,051,873 | $ | 443,880 | ||
Long Term Portion of Finance Lease Receivable | $ | 1,918,483 | $ | 2,951,859 |
Payments to be received on Finance Lease Receivables (undiscounted):
31-Mar-23 | |||
Year 1 | $ | 1,296,605 | |
Year 2 | 819,081 | ||
Year 3 | 326,595 | ||
Year 4 | 330,405 | ||
Year 5 | 309,000 | ||
Year 6 | 577,250 | ||
less: amount representing interest income | (688,581 | ) | |
Finance Lease Receivable | $ | 2,970,356 | |
Current Portion of Finance Lease Receivable | $ | 1,051,873 | |
Long Term Portion of Finance Lease Receivable | $ | 1,918,483 | |
* Includes unguaranteed residual |
7. Promissory Note Receivable
On February 1, 2023, the Company entered into a promissory note with a customer for a principal amount of $173,072 to be repaid in twelve fixed monthly payments of $15,055, with an implied interest rate of 8.0%. The principal amount of the promissory note was transferred from accounts receivable. The carrying value of the promissory note receivable as at March 31, 2023 is $159,171, (2022-nil).
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
8. Inventory
The following is a listing of inventory as at March 31, 2023 and 2022:
March 31, 2023 | March 31, 2022 | |||||
Work in Process and Parts | $ | 9,737,474 | $ | 17,025,863 | ||
Finished Goods | 31,871,760 | 15,228,991 | ||||
Total | $ | 41,609,234 | $ | 32,254,854 |
During the year ended March 31, 2023, management wrote down the value of inventory by $192,000 (2022 - $153,798; 2021 - $57,261), and this amount is included in Cost of Sales. During the year ended March 31, 2023, $31,438,059 of inventory was included in cost of sales (2022 - $13,360,068, 2021 - $9,706,044). As at March 31, 2022 management allocated $353,575 to finished goods inventory that represents the expected value of 2 EV 550s that were leased to a customer as at March 31, 2022.
9. Right of Use Assets and Lease Liabilities
The Company has recorded Right of Use Assets and Lease Liabilities in its consolidated statement of financial position related to properties for which the Company has entered into lease agreements that expire in more than one year at the inception of the leases. These leases are in a single class of Right of Use Assets, whose carrying value at March 31, 2023 was $4,845,738 (March 31, 2022 - $116,678). Rental payments on the Right of Use Assets are discounted using an 8% rate of interest and capitalized on the Consolidated Statement of Financial Position as Lease Liabilities. The value of the Right of Use Assets is determined at lease inception and include the capitalized lease liabilities, incorporate upfront costs incurred and incentives received, and the value is depreciated over the term of the lease. For the year ended March 31, 2023 the Company incurred interest expense of $229,743 (2022 - $18,321; 2021 - $39,432) on the Lease Liabilities, recognized depreciation expense of $571,793 (2022 - $233,500; 2021 - $265,013) on the Right of Use Assets and made total rental payments of $394,580 (2022 - $284,363; 2021 - $311,899).
During the year ended March 31, 2023 the Company entered into four property leases that are accounted for as Right of Use Assets and lease liabilities under IFRS 16, as follows:
• a two-year lease of an office in California that commenced in February 2023;
• a one-year lease that commenced in August 2022;
• a twelve-year lease on a property in West Virginia that commenced in August 2022 (see below), and;
• a lease that was assumed in the acquisition of Lion Truck Body (Note 21) that expires in December 2024.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
9. Right of use assets and lease liabilities (continued)
GreenPower entered into a Contract of Lease-Purchase with the South Charleston Development Authority for a property located in South Charleston, West Virginia during the year ended March 31, 2023. The terms of the lease required no cash up front and monthly lease payments that start May 1, 2023. GreenPower is eligible for up to $1,300,000 forgiveness on the lease, calculated on a pro-rata basis for the employment up to 200 employees by December 31, 2024. GreenPower is also eligible for additional forgiveness of $500,000 for every 100 employees above the first 200. Title to the property will be transferred to GreenPower once total lease and the amount of the forgiveness reach $6.7 million. The lease liability recorded for this lease at lease inception was not reduced to reflect contingently forgivable amounts due to the uncertainty of the attainment of employment levels required to realize these lease liability reduction benefits as at the inception of the lease.
The following table summarizes remaining payments on GreenPower's Lease Liabilities (undiscounted) as at March 31, 2023:
1 year | $ | 1,044,016 | |
thereafter | 6,436,500 | ||
less amount representing interest expense | (2,240,665 | ) | |
Lease liability | 5,239,851 | ||
Current Portion of Lease Liabilities | 669,040 | ||
Long Term Portion of Lease Liabilities | $ | 4,570,811 |
Payments on leases that were classified as short-term leases for the year ended March 31, 2023 totaled $236,480 (2022 - $132,500, 2021 - $65,708). Payments on short term leases are recognized in office expense, and remaining payments on short term leases as at March 31, 2023 total $21,495.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
10. Property and Equipment
The following is a summary of activities for the years ended March 31, 2023, and March 31, 2022:
Demonstration | Tools and | Leasehold | |||||||||||||||||||||||||
Computers | Furniture | Automobiles | Electric Buses | Leased Asset | Equipment | Land | Improvements | Total | |||||||||||||||||||
Cost | |||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | 167,234 | $ | 77,846 | $ | 464,075 | $ | 2,712,777 | $ | 672,151 | $ | 1,055,285 | $ | 801,317 | $ | 100,415 | $ | 6,051,100 | |||||||||
Additions | 75,406 | 22,894 | 49,845 | 14,678 | - | 185,954 | - | 7,215 | 355,992 | ||||||||||||||||||
Acquired in Acquisition | 214 | 71 | 75,500 | - | - | 136,118 | - | 56,349 | 268,252 | ||||||||||||||||||
Asset sold | - | - | - | - | - | - | (801,317 | ) | - | (801,317 | ) | ||||||||||||||||
Foreign exchange translation | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
Balance, March 31, 2023 | $ | 242,854 | $ | 100,811 | $ | 589,420 | $ | 2,727,455 | $ | 672,151 | $ | 1,377,357 | $ | - | $ | 163,979 | $ | 5,874,027 | |||||||||
Depreciation and impairment losses | |||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | 77,799 | $ | 35,412 | $ | 82,901 | $ | 931,347 | $ | 667,342 | $ | 769,356 | $ | - | $ | 43,625 | $ | 2,607,783 | |||||||||
Depreciation | 64,820 | 12,912 | 67,441 | 282,957 | 4,809 | 194,875 | - | 34,338 | 662,152 | ||||||||||||||||||
Foreign exchange translation | - | - | - | (698 | ) | - | - | - | - | (698 | ) | ||||||||||||||||
Balance, March 31, 2023 | $ | 142,619 | $ | 48,324 | $ | 150,342 | $ | 1,213,606 | $ | 672,151 | $ | 964,231 | $ | - | $ | 77,963 | $ | 3,269,236 | |||||||||
Carrying amounts | |||||||||||||||||||||||||||
As at, March 31, 2022 | $ | 89,435 | $ | 42,434 | $ | 381,173 | $ | 1,781,430 | $ | 4,809 | $ | 285,930 | $ | 801,317 | $ | 56,789 | $ | 3,443,317 | |||||||||
As at, March 31, 2023 | $ | 100,235 | $ | 52,487 | $ | 439,078 | $ | 1,513,849 | $ | - | $ | 413,126 | $ | - | $ | 86,016 | $ | 2,604,791 |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
10. Property and Equipment (continued)
During the year ended March 31, 2023 the Company completed the sale of land owned by the Company In Porterville California for gross proceeds of $950,000 and generated a gain on the sale of $72,867 that was included in Other income. During the year GreenPower also acquired property, plant and equipment with an aggregate fair value of $268,252, as part of its acquisition of Lion Truck Body.
During the year ended March 31, 2022 the Company transferred eight EV Stars from Inventory to PPE that were being used as demonstration vehicles, and one of these EV Stars was subsequently transferred to inventory and sold. The Company also transferred one EV 350 bus from inventory to PPE, that is being leased to a customer under a short term lease, and one EV 250 that was previously on finance lease where the Company and the Lessee entered into a mutual release on the finance lease. During the year ended March 31, 2022 the Company wrote down the value of PPE to its estimated recoverable amount by a total of $517,626 associated with one EV 250, one EV 350, and two Synapse shuttle buses.
11. Line of Credit
The Company's primary bank account denominated in US dollars is linked to its Line of Credit such that funds deposited to the bank account reduce the outstanding balance on the Line of Credit. As at March 31, 2023 the Company's Line of Credit had a credit limit of up to $8,000,000 (2022 - $8,000,000). The Line of Credit bears interest at the bank's US Base Rate (March 31, 2023 - 8.0%, March 31, 2022 - 4.0%) plus 1.5%.
The Line of Credit is secured by a general floating charge on the Corporation's assets and the assets of one of its subsidiaries, and one of the Company's subsidiaries has provided a corporate guarantee. Two directors of the Company have provided personal guarantees for a total of $5,020,000. The Line of Credit contains customary business covenants such as maintenance of security, maintenance of corporate existence, and other covenants typical for a corporate operating line of credit, and the Line of Credit has one financial covenant, to maintain a current ratio greater than 1.2:1, for which the Company is in compliance as at March 31, 2023 and March 31, 2022. In addition, the availability of the credit limit over $5,000,000 is subject to margin requirements of a percentage of finished goods inventory and accounts receivable. As of March 31, 2023 the Company had a drawn balance of $6,612,232 (2022 - $5,766,379) on the Line of Credit.
12. Share Capital
Authorized
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued
During the year ended March 31, 2023, the Company issued a total of 1,568,590 common shares, including 1,565,268 shares issued under the At the Market Offering (ATM), and 3,322 shares from the exercise of options.
During the year ended March 31, 2022, the Company issued a total of 2,255,478 common shares, including 1,925,656 shares from the exercise of warrants, and 329,822 shares from the exercise of options.
During the year ended March 31, 2021, the Company issued a total of 5,405,809 common shares, including 1,672,028 shares from the exercise of warrants, 145,537 shares from the exercise of options, 1,703,240 shares from converted debentures and 1,860,000 shares issued in the Company's IPO as well as 25,000 shares issued in a concurrent private placement and an additional 5 net fractional issued as a result of the share consolidation.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
12. Share Capital (continued)
On August 28, 2020 the Company announced the pricing of its U.S. initial public offering of 1,860,000 common shares and concurrent private placement of 25,000 common shares, which closed on September 1, 2020. Both the initial public offering and the concurrent private placement priced at $20.00 per share for gross proceeds of $37.7 million before underwriting discounts and other costs.
As at March 31, 2023 and March 31, 2022 the Company had no shares held in escrow.
At the Market Offering
In September 2022, the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $20,000,000. The sale of common shares is to be made through "at-the-market distributions" ("ATM") on the NASDAQ stock exchange. During the year ended March 31, 2023, the Company sold 1,565,268 common shares under the ATM program for gross proceeds of $4,895,826.
The Company incurred approximately $217,000 in professional fees and other direct expenses in connection with the prospectus offering and the ATM, which was included in share issuance costs for the year ended March 31, 2023 (2022 - $Nil).
13. Stock Options
The Company has two incentive stock option plans whereby it grants options to directors, officers, employees, and consultants of the Company, the 2023 Equity Incentive Plan (the "2023 Plan") which was adopted in order to grant awards to people in the United States, and the 2022 Equity Incentive Plan (the "2022 Plan").
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non-stock option awards mean a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards. No stock options have been issued under the 2023 Plan as at March 31, 2023.
2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified on February 21, 2023, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
13. Stock Options (continued)
granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed 2,467,595. No performance based awards have been issued as at March 31, 2023 or as at March 31, 2022. The 2022 Plan is considered an "evergreen" plan, since Options which have been exercised, cancelled, terminated, surrendered, forfeited or expired without being exercised shall be available for subsequent grants under the 2022 Plan and the number of awards available to grant increases as the number of issued and outstanding Shares increases.
Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non- diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to 1,491,541 shares and which was subsequently further increased to allow up to 2,129,999 shares to be issued under the plan (the "2016 Plan"). Prior to the adoption of the 2016 Plan, the Company had adopted an incentive stock option plan (the "Plan"), whereby it could grant options to directors, officers, employees, and consultants of the Company.
The Company had the following incentive stock options granted under the 2022 Plan, the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2023:
Exercise | Balance | Forfeited | Balance | ||||||||||||||||
Expiry Date | Price | March 31, 2022 | Granted | Exercised | or Expired | March 31, 2023 | |||||||||||||
May 26, 2022 | CDN | $ | 5.25 | 5,357 | - | - | (5,357 | ) | - | ||||||||||
December 18, 2022 | CDN | $ | 3.15 | 14,286 | - | - | (14,286 | ) | - | ||||||||||
May 4, 2023 | CDN | $ | 3.50 | 68,571 | - | (2,857 | ) | (8,570 | ) | 57,144 | |||||||||
November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | - | - | 50,000 | |||||||||||
February 12, 2024 | CDN | $ | 3.50 | 73,214 | - | - | (1,427 | ) | 71,787 | ||||||||||
January 30, 2025 | CDN | $ | 2.59 | 281,787 | - | (465 | ) | (26,682 | ) | 254,640 | |||||||||
February 11, 2025 | CDN | $ | 8.32 | 50,000 | - | - | - | 50,000 | |||||||||||
July 3, 2025 | CDN | $ | 4.90 | 41,787 | - | - | (25,716 | ) | 16,071 | ||||||||||
November 19, 2025 | US | $ | 20.00 | 300,000 | - | - | - | 300,000 | |||||||||||
December 4, 2025 | US | $ | 20.00 | 20,000 | - | - | - | 20,000 | |||||||||||
May 18, 2026 | CDN | $ | 19.62 | 139,650 | - | - | (66,375 | ) | 73,275 | ||||||||||
December 10, 2026 | CDN | $ | 16.45 | 658,000 | - | - | (104,500 | ) | 553,500 | ||||||||||
July 4, 2027 | CDN | $ | 4.25 | - | 15,000 | - | - | 15,000 | |||||||||||
November 2, 2027 | US | $ | 2.46 | - | 60,000 | - | (50,000 | ) | 10,000 | ||||||||||
February 14, 2028 | CDN | $ | 3.80 | - | 660,000 | - | (15,000 | ) | 645,000 | ||||||||||
March 28, 2028 | CDN | $ | 2.85 | - | 100,000 | - | - | 100,000 | |||||||||||
Total outstanding | 1,702,652 | 835,000 | (3,322 | ) | (317,913 | ) | 2,216,417 | ||||||||||||
Total exercisable | 700,957 | 1,265,128 | |||||||||||||||||
Weighted Average | |||||||||||||||||||
Exercise Price (CDN$) | $ | 12.94 | $ | 3.66 | $ | 3.37 | $ | 11.16 | $ | 10.72 | |||||||||
Weighted Average Remaining Life | 3.5 years | 3.4 years |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
13. Stock Options (continued)
As at March 31, 2023, there were 255,246 stock options available for issuance under the 2023 and 2022 plan and 2,467,595 performance based awards available for issuance under the 2023 Plan and the 2022 Plan. During the year ended March 31, 2023, 317,913 options were forfeited or expired.
On July 4, 2022, the Company granted 15,000 options to an employee with a term of five years and an exercise price of CDN$4.25 per share which vest 25% after 4 months, and after years 1, 2, and 3.
On November 2, 2022, the Company granted 60,000 options to employees with a term of five years and an exercise price of US$2.46 per share which vest 25% after 4 months, and after years 1, 2, and 3.
On February 14, 2023, the Company granted 660,000 options with a term of five years and an exercise price of CDN$3.80 per share, comprised of:
a. 420,000 stock options to officers and directors which vest 25% after 4 months, and then 25% after six months, nine months and twelve months;
b. 225,000 stock options to employees which vest 25% after 4 months, and then 25% after years 1, 2, and 3;
c. 15,000 stock options to a consultant which vest 25% after 4 months, and then 25% after six months, nine months and twelve months;
On March 28, 2023 the Company granted 100,000 stock options to employees. The stock options have an exercise price of CDN$2.85 per share, a term of 5 years, which vest after 4 months, and then 25% after years 1, 2, and 3.
During the year ended March 31, 2023, 3,322 common shares were issued pursuant to the exercise of stock options and 317,913 options were forfeited or expired.
During the year ended March 31, 2023, the Company incurred share-based compensation expense with a measured fair value of $3,645,893. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
Subsequent to the end of the reporting period:
• Between April 13, 2023 and May 1, 2023 the Company issued 42,858 common shares pursuant to the exercise of stock options at an exercise price of CDN$3.50 per share for gross proceeds of CDN$150,003.
• On May 4, 2023 14,286 stock options exercisable at CDN$3.50 per share expired unexercised.
• Between April 1 2023 and June 30, 2023, 74,761 stock options exercisable at a weighted average share price of $5.54 were forfeited.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
13. Stock Options (continued)
The Company had the following incentive stock options granted under the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2022:
Exercise | Balance | Forfeited | Balance | ||||||||||||||||
Expiry Date | Price | March 31, 2021 | Granted | Exercised | or Expired | March 31, 2022 | |||||||||||||
October 27, 2021 | CDN | $ | 4.34 | 71,429 | - | (71,429 | ) | - | - | ||||||||||
February 2, 2022 | CDN | $ | 5.25 | 65,286 | - | (57,144 | ) | (8,142 | ) | - | |||||||||
May 26, 2022 | CDN | $ | 5.25 | 148,214 | - | (142,857 | ) | - | 5,357 | ||||||||||
December 18, 2022 | CDN | $ | 3.15 | 25,000 | - | (10,714 | ) | - | 14,286 | ||||||||||
May 4, 2023 | CDN | $ | 3.50 | 70,357 | - | (1,786 | ) | - | 68,571 | ||||||||||
November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | - | - | 50,000 | |||||||||||
February 12, 2024 | CDN | $ | 3.50 | 78,571 | - | (5,357 | ) | - | 73,214 | ||||||||||
January 30, 2022 | CDN | $ | 2.59 | 19,643 | - | (1,786 | ) | (17,857 | ) | - | |||||||||
January 30, 2025 | CDN | $ | 2.59 | 309,822 | - | (26,964 | ) | (1,071 | ) | 281,787 | |||||||||
July 3, 2022 | CDN | $ | 4.90 | 7,143 | - | (7,143 | ) | - | - | ||||||||||
February 11, 2025 | CDN | $ | 8.32 | - | 50,000 | 50,000 | |||||||||||||
July 3, 2025 | CDN | $ | 4.90 | 49,643 | - | (4,642 | ) | (3,214 | ) | 41,787 | |||||||||
November 19, 2025 | US | $ | 20.00 | 300,000 | - | - | - | 300,000 | |||||||||||
December 4, 2025 | US | $ | 20.00 | 20,000 | - | - | - | 20,000 | |||||||||||
May 18, 2026 | CDN | $ | 19.62 | - | 173,650 | - | (34,000 | ) | 139,650 | ||||||||||
December 10, 2026 | CDN | $ | 16.45 | - | 693,000 | - | (35,000 | ) | 658,000 | ||||||||||
Total outstanding | 1,215,108 | 916,650 | (329,822 | ) | (99,284 | ) | 1,702,652 | ||||||||||||
Total exercisable | 882,964 | 700,957 | |||||||||||||||||
Weighted Average | |||||||||||||||||||
Exercise Price (CDN$) | $ | 9.35 | $ | 16.61 | $ | 4.70 | $ | 13.60 | $ | 12.94 | |||||||||
Weighted Average Remaining Life | 3.1 years | 3.5 years |
As at March 31, 2022, there were 612,152 stock options available for issuance under the 2019 plan. During the year ended March 31, 2022, 99,284 options were forfeited or expired.
On May 18, 2021 the Company granted 173,650 options to employees with a term of five years and an exercise price of CDN$19.62 per share which vest 25% after 4 months, after years 1, 2, and 3.
On December 10, 2021 the Company granted 693,000 options with a term of five years and an exercise price of CDN$16.45 per share, comprised of:
• 350,000 stock options to officers and directors which vest 25% after 4 months, and then 25% after six months, nine months and twelve months;
• 278,000 stock options to employees which vest 25% after 4 months, and then 25% after years 1, 2, and 3;
• 65,000 stock options to two consultants which vest 25% after 4 months, and then 25% after six months, nine months and twelve months.
On February 11, 2022 the Company granted 50,000 stock options to an employee. The stock options have an exercise price of CDN$8.32 per share, a term of 3 years, and are exercisable after six months.
During the year ended March 31, 2022, 329,822 common shares were issued pursuant to the exercise of stock options.
During the year ended March 31, 2022, the Company incurred share-based compensation expense with a measured fair value of $5,771,475. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
13. Stock Options (continued)
The Company had the following incentive stock options granted under the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2021:
Exercise | Balance | Forfeited | Balance | ||||||||||||||||
Expiry Date | Price | March 31, 2020 | Granted | Exercised | or Expired | March 31, 2021 | |||||||||||||
May 26, 2020 | CDN | $ | 4.20 | 21,429 | - | - | (21,429 | ) | - | ||||||||||
July 10, 2020 | CDN | $ | 3.85 | 7,143 | - | - | (7,143 | ) | - | ||||||||||
February 4, 2021 | CDN | $ | 2.45 | 57,143 | - | (57,143 | ) | - | - | ||||||||||
May 6, 2021 | CDN | $ | 2.45 | 74,286 | - | (62,858 | ) | (11,428 | ) | - | |||||||||
October 27, 2021 | CDN | $ | 4.34 | 71,429 | - | - | - | 71,429 | |||||||||||
February 2, 2022 | CDN | $ | 5.25 | 65,286 | - | - | - | 65,286 | |||||||||||
May 26, 2022 | CDN | $ | 5.25 | 148,214 | - | - | - | 148,214 | |||||||||||
December 18, 2022 | CDN | $ | 3.15 | 25,000 | - | - | - | 25,000 | |||||||||||
May 4, 2023 | CDN | $ | 3.50 | 75,714 | - | (5,357 | ) | - | 70,357 | ||||||||||
November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | - | - | 50,000 | |||||||||||
February 12, 2024 | CDN | $ | 3.50 | 78,571 | - | - | - | 78,571 | |||||||||||
January 30, 2022 | CDN | $ | 2.59 | 25,000 | - | (5,357 | ) | - | 19,643 | ||||||||||
January 30, 2025 | CDN | $ | 2.59 | 319,286 | - | (5,893 | ) | (3,571 | ) | 309,822 | |||||||||
July 3, 2022 | CDN | $ | 4.90 | - | 14,286 | (7,143 | ) | - | 7,143 | ||||||||||
July 3, 2025 | CDN | $ | 4.90 | - | 51,429 | (1,786 | ) | - | 49,643 | ||||||||||
November 19, 2025 | US | $ | 20.00 | - | 300,000 | - | - | 300,000 | |||||||||||
December 4, 2025 | US | $ | 20.00 | - | 20,000 | - | - | 20,000 | |||||||||||
Total outstanding | 1,018,501 | 385,715 | (145,537 | ) | (43,571 | ) | 1,215,108 | ||||||||||||
Total exercisable | 629,750 | 882,964 | |||||||||||||||||
Weighted Average | |||||||||||||||||||
Exercise Price (CDN$) | $ | 3.50 | $ | 21.70 | $ | 2.65 | $ | 3.55 | $ | 9.35 | |||||||||
Weighted Average Remaining Life | 3.0 years | 3.1 years |
As at March 31, 2021, there were 874,148 stock options available for issuance under the 2019 plan.
During the year ended March 31, 2021, 43,571 options were forfeited or expired.
On July 3, 2020 the Company granted:
• 51,429 stock options to employees with an exercise price of CDN$4.90 per share and with a termof 5 years, and which vest 25% after 4 months, and then 25% after years 1, 2, and 3, and
• 14,286 stock options to a consultant (IR provider) with an exercise price of CDN$4.90 per share and with a term of 2 years and which vest 25% at the end of every 3 months for a period of twelve months.
On November 19, 2020 the Company granted an aggregate of 300,000 stock options, with 100,000 granted to each of three of Greenpower's officers. The stock options have an exercise price of $20.00 per share, a term of 5 years, and are exercisable 25% after four months, and 25% after the first, second and third year from the grant date.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
13. Stock Options (continued)
On December 4, 2020 the Company granted an aggregate of 20,000 stock options, with 5,000 granted to each of the Company's four independent directors. The stock options have an exercise price of $20.00 per share, a term of 5 years, and are exercisable at the end of every 3 months for a period of twelve months.
During the year ended March 31, 2021, 145,537 common shares were issued pursuant to the exercise of stock options.
During the year ended March 31, 2021, the Company incurred share-based compensation expense with a measured fair value of $2,098,761. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
The weighted average share price on the exercise dates for the years ending March 31, 2023, 2022, and 2021 respectively were CDN $8.06, CDN $10.87, and CDN $2.65.
The following weighted-average assumptions were used for the Black-Scholes valuation of stock option grants:
For the year ended | March 31, 2023 | March 31, 2022 | March 31, 2021 |
Share price on grant date | CDN $3.66 | CDN $16.61 | $17.21 |
Exercise price | CDN $3.66 | CDN $16.61 | $17.21 |
Risk-free interest rate | 3.22% | 1.23% | 0.47% |
Expected life of options | 5 years | 4.9 years | 5 years |
Annualized volatility | 101% | 94% | 73% |
Forfeiture rate | Nil | Nil | Nil |
Dividend rate | N/A | N/A | N/A |
14. Warrants
As at March 31, 2023 and March 31, 2022 the Company had an outstanding warrant balance of nil.
The following table summarizes GreenPower's warrant activity during the year ended March 31, 2022:
Exercise | Balance | Balance | ||||||||||||||
Expiry Date | Price | March 31, 2021 | Issued | Exercised | Expired | March 31, 2022 | ||||||||||
June 29, 2021 | CDN $4.55 | 628,571 | - | (628,571 | ) | - | - | |||||||||
September 25, 2021 | CDN $3.50 | 491,072 | - | (491,071 | ) | (1 | ) | - | ||||||||
October 12, 2021 | CDN $3.50 | 53,571 | - | (53,571 | ) | - | - | |||||||||
March 14, 2022 | CDN $4.20 | 685,714 | - | (685,714 | ) | - | - | |||||||||
May 6, 2023 | USD $2.6677 | 53,035 | - | (53,026 | ) | (9 | ) | - | ||||||||
May 8, 2023 | USD $2.6677 | 13,703 | - | (13,703 | ) | - | - | |||||||||
Total outstanding | 1,925,666 | - | (1,925,656 | ) | (10 | ) | - | |||||||||
Weighted Average | ||||||||||||||||
Exercise Price (CDN$) | 4.06 | NA | $ | 4.09 | $ | 3.41 | NA |
During the year ended March 31, 2022, the Company did not issue any warrants and a total of 10 warrants expired unexercised.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
14. Warrants (continued)
During the year ended March 31, 2022 the Company issued the following common shares from the exercise of warrants:
• 628,571 common shares were issued at a price of CDN$4.55 per share pursuant to the exercise of 628,571 warrants;
• 544,642 common shares were issued at a price of CDN$3.50 per share pursuant to the exercise of 544,642 warrants, and
• 685,714 common shares were issued at a price of CDN$4.20 per share pursuant to the exercise of 685,714 warrants, and
• 66,729 common shares were issued at a price of $2.6677 per share pursuant to the exercise of 66,729 warrants.
The following table summarizes deferred financing fees for the years ended March 31, 2023 and March 31, 2022, which relates to deferred financing fees for issued warrants, amortized during the period:
March 31, 2023 | March 31, 2022 | |||||
Deferred financing fees, beginning of year | $ | - | $ | 416,738 | ||
less: Amortization of Deferred Financing Fees | - | (416,738 | ) | |||
Deferred financing fees, end of year | $ | - | $ | - |
15. Deferred Revenue
The Company recorded Deferred Revenue of $9,998,609 for deposits received from customers for the sale of all-electric buses which were not delivered as at March 31, 2023 (March 31, 2022 - $6,514,712). The following table summarizes changes in deferred revenue during the years ended March 31, 2023 and March 31, 2022:
The Company expects to recognize revenue from amounts held in the current portion of deferred revenue within the next twelve months, based on expected deliveries of vehicles and from completed sales of vehicle parts. The Company expects to recognized revenue from amounts held in the long-term portion of deferred revenue more than twelve months after the reporting date. As at March 31, 2023 the current portion of deferred revenue includes a financing component of $324,967 (2022 - nil), and during the year ended March 31, 2023, $83,437 of this deferred revenue was recognized in revenue (2022 - nil).
March 31, 2023 | March 31, 2022 | |||||
Deferred Revenue, beginning of year | $ | 6,514,712 | $ | 125,005 | ||
Additions to deferred revenue during the year | 11,576,344 | 7,524,411 | ||||
Deposits returned | (302,298 | ) | - | |||
Revenue recognized from deferred revenue during the year | (7,790,149 | ) | (1,134,704 | ) | ||
Deferred Revenue, end of year | $ | 9,998,609 | $ | 6,514,712 | ||
Current portion | $ | 8,059,769 | $ | 3,578,877 | ||
Long term portion | 1,938,840 | 2,935,835 | ||||
$ | 9,998,609 | $ | 6,514,712 |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
16. Financial Instruments
The Company's financial instruments consist of cash, accounts receivable, promissory note receivable, finance lease receivables, line of credit, loans payable to related parties, term loan, accounts payable and accrued liabilities, other liabilities, and lease liabilities.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1:Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2:Inputs other than quoted prices that are observable for the asset or liabilities either directly or indirectly; and
Level 3:Inputs that are not based on observable market data
The fair value of the Company's financial instruments approximates their carrying value, unless otherwise noted.
The Company has exposure to the following financial instrument related risks.
Credit risk
The Company's exposure to credit risk is on its cash, accounts receivable, promissory note receivable, and on its finance lease receivables. The maximum exposure to credit risk is their carrying amounts in the consolidated statement of Financial Position.
Cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its account receivable, finance lease receivables and promissory note receivable at each reporting period end and on an annual basis. As at March 31, 2023 the Company recognized an allowance for credit losses of $139,370 (2022 - $44,579) against its accounts receivable (Note 4). During the year ended March 31, 2023 the Company recognized an impairment of nil on accounts receivable related to finance lease receivables (2022 - $43,261).
Liquidity risk
The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's cash balances and available liquidity on the Company's $8 million operating line of credit. The Company's cash is invested in bank accounts at major financial institutions in Canada and the United States and is available on demand. The continuation of the Company as a going concern is dependent on future cash flows from operations including the successful sale and manufacture of electric vehicles to achieve a profitable level of operations and obtaining necessary financing to fund ongoing operations. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern (Note 1). The Company will continue to rely on additional financings to further its operations and meet its capital requirements.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
16. Financial Instruments (continued)
The following table summarizes the Company's financial commitments by maturity as at March 31, 2023:
March 31, 2023 | Less than 3 months | 3 to 12 months | One to five years | Thereafter | ||||||||
Line of credit (Note 1) | $ | 6,612,232 | $ | - | $ | - | $ | - | ||||
Accounts payable and accrued liabilities | 7,316,267 | - | - | - | ||||||||
Loans payable to related parties | 3,287,645 | - | - | - | ||||||||
Lease liabilities | 272,919 | 771,097 | 3,336,500 | 3,100,000 | ||||||||
Term loan | 7,246 | 21,835 | 163,594 | 1,309,463 | ||||||||
Other liabilities | 2,142 | 6,425 | 25,700 | - | ||||||||
$ | 17,498,451 | $ | 799,357 | $ | 3,525,794 | $ | 4,409,463 |
(1) GreenPower's operating line of credit with the Bank of Montreal is repayable on demand and is therefore recorded as a current liability with less than 3 months to maturity. GreenPower remains in compliance with the financial covenant under the facility and since inception of the loan the Bank of Montreal has not demanded repayment of the facility, however there is no guarantee that the Bank of Montreal will not do so in the future.
As part of the acquisition of Lion Truck Body Inc. that closed on July 7, 2022, the Company agreed to assume a term loan from the seller, with principal outstanding of approximately of approximately $1.5 million as at July 7, 2022, an interest rate of 3.75%, a maturity in May 2050, and fixed monthly payments (Note 21).
Market risks
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange. The Company is exposed to interest rate risk with respect to its Line of Credit (Note 10). The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada. Management monitors its foreign currency balances, but the Company does not engage in any hedging activities to reduce its foreign currency risk.
At March 31, 2023, the Company was exposed to currency risk through the following financial assets and liabilities in CDN Dollars.
CAD | |||
Cash | $ | 138,869 | |
Accounts Receivable | $ | 89,944 | |
Sales tax receivable | $ | 42,526 | |
Prepaids and deposits | $ | 10,988 | |
Finance Lease Receivable | $ | 82,000 | |
Accounts Payable and Accrued Liabilities | $ | (410,321 | ) |
Related Party Loan & Interests Payable | $ | (4,242,071 | ) |
The CDN/USD exchange rate as at March 31, 2023 was $0.7389 (March 31, 2022 - $0.8003). Based on the net exposure and assuming all other variables remain constant, a 10% change in the appreciation or depreciation of the Canadian dollar relative to the US dollar would result in a change of approximately $428,000 to other comprehensive income/loss.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
17. Capital Management
The Company's capital management objective is to obtain sufficient capital to develop new business opportunities for the benefit of its shareholders. To meet these objectives, management monitors the Company's ongoing capital requirements on specific business opportunities on a case-by-case basis. The capital structure of the Company consists of cash, operating line of credit, the term loan, loans from related parties and equity attributable to common shareholders, consisting of issued share capital and deficit. On September 16, 2022 the Company established an at the market equity program (the ATM program) under which the company may issue, at its discretion, up to $20 million of common shares from treasury to the public. During the period ended March 31, 2023 the Company issued a total of 1,565,268 shares under the ATM program for gross proceeds of $4,895,826 (Note 12).
The ATM offering remains open and future shares may be issued up to the total remaining offering amount, at management's discretion. As at March 31, 2023, the Company had a cash balance of $600,402 working capital, defined as current assets minus current liabilities, of $27,655,892 accumulated deficit of ($60,790,972) and shareholder's equity of $27,662,006. Subject to market conditions and other factors the Company may raise additional capital in the future to fund and grow its business for the benefit of shareholders. There has been no change to the Company's approach to financial management during the year ended March 31, 2023.
18. Related Party Transactions
A summary of compensation and other amounts paid to directors, officers and key management personnel is as follows:
For the Years Ended | |||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
Salaries and Benefits (1) | $ | 580,774 | $ | 575,255 | $ | 473,841 | |||
Consulting fees (2) | 396,250 | 396,456 | 251,007 | ||||||
Non-cash Options Vested (3) | 2,100,717 | 3,242,528 | 1,698,487 | ||||||
Accomodation and Rentals (4) | - | - | 5,749 | ||||||
Total | $ | 3,077,741 | $ | 4,214,239 | $ | 2,429,084 |
1) Salaries and benefits incurred with directors and officers are included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss.
2) Consulting fees included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss are paid to the Chairman and CEO for management consulting services, and includes Director's Fees paid to GreenPower's four independent directors.
3) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.
4) Includes accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director, and truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director. These costs are expensed on the Consolidated Statements of Operations and Comprehensive Loss.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
18. Related Party Transactions (continued)
Accounts payable and accrued liabilities at March 31, 2023 included $208,215 (March 31, 2022 - $243,773) owed to officers, directors, and companies controlled by officers and directors, and shareholders, which is non-interest bearing, unsecured and has no fixed terms of repayment.
During the year ended March 31, 2023, the Company received loans totaling CAD$3,670,000 and US$25,000 from a company that is beneficially owned by the CEO and Chairman of the Company, and CAD$250,000 was loaned to the Company from a company beneficially owned by a Director of the Company. The loans bear interest at 12.0% per annum plus such additional bonus interest, if any, as may be agreed to and approved by GreenPower's Board of Directors at a later date. The loans from a company that is beneficially owned by the CEO and Chairman of the Company matured on March 31, 2023, and the loan from a company beneficially owned by a Director of the Company matures on October 31, 2023.
The Company has agreed to grant the lenders a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to any security assignment of senior lenders.
A director of the Company and the Company's CEO and Chairman have each provided personal guarantees of $2,510,000, or $5,020,000 in total to support the Company's $8 million operating line of credit. In consideration for these guarantees, in June 2018 the Company issued 628,571 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.55 per share and in March 2019 the Company issued 685,714 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.20 per share. During the year ended March 31, 2022 the director of the Company and the Company's CEO and Chairman exercised all of these warrants for 1,314,285 common shares of the Company.
19. Warranty Liability
The Company provides its customers with a base warranty on its vehicles including those covering brake systems, lower-level components, fleet defect provisions and battery-related components. The majority of warranties cover periods of five years, with some variation depending on the contract. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest past cost information may differ from future claims. This assessment relies on estimates and assumptions about expenditures on future warranty claims. Actual warranty disbursements are inherently uncertain, and differences may impact cash expenditures on these claims. It is expected that the Company will incur approximately $535,000 in warranty costs within the next twelve months, with disbursements for the remaining warranty liability incurred after this date. An accrual for expected future warranty expenditures are recognized in the period when the revenue is recognized from the associated vehicle sale, and is expensed in Product Development Costs in the Company's Sales, general and administrative costs. Assuming Revenue in each year remains unchanged, an increase or decrease of 5% to the warranty provision would have a corresponding increase or decrease of product development costs of approximately $69,000 for the year ended March 31, 2023 (2022 - $23,000).
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
19. Warranty liability (continued)
Year ended | Year ended | |||||
March 31, 2023 | March 31, 2022 | |||||
Opening balance | $ | 1,042,983 | $ | 949,751 | ||
Warranty additions | 1,375,673 | 456,779 | ||||
Warranty disbursements | (339,349 | ) | (278,726 | ) | ||
Warranty expiry | 0 | (85,251 | ) | |||
Foreign exchange translation | (1,557 | ) | 430 | |||
Total | $ | 2,077,750 | $ | 1,042,983 | ||
Current portion | $ | 535,484 | $ | 313,517 | ||
Long term portion | 1,542,265 | 729,466 | ||||
Total | $ | 2,077,749 | $ | 1,042,983 |
20. Income Taxes
Income tax expense is recognized based on the combined BC and Federal income tax rate for the full financial year applied to the pre-tax income of the reporting period. The Company's effective tax rate for the years ended March 31, 2023, 2022 and 2021 was 27.00%.
The difference between tax expenses for the years and the expected income taxes based on the statutory rate are as follows:
For the year ended | |||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
Combined statutory tax rate | 27.00 | % | 27.00 | % | 27.00 | % | |||
Expected income tax expense (recovery) | $ | (4,061,841 | ) | $ | (4,052,678 | ) | $ | (2,115,924 | ) |
Items not deductible for tax purposes | 1,276,004 | 1,671,157 | 706,127 | ||||||
Difference in tax rate in other jurisdictions | (51,259 | ) | (216,059 | ) | (107,357 | ) | |||
Unrecognized deductible temporary differences and loss carryforwards | 2,837,096 | 2,597,580 | 1,517,154 | ||||||
Deferred income tax expense (recovery) | $ | - | $ | - | $ | - |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
20. Income taxes (continued)
The nature and effect of the temporary differences giving rise to the deferred income tax assets as of March 31, 2023 and March 31, 2022 are summarized below:
As at | ||||||
Deferred income tax assets | March 31, 2023 | March 31, 2022 | ||||
Non-capital loss carry-forwards | $ | 10,504,646 | $ | 8,625,123 | ||
Investment in subsidiary | - | 100,654 | ||||
Accounts receivable, inventory, and promissory note receivable | - | 215,539 | ||||
Capital assets | 184,443 | 149,810 | ||||
Right of use assets and lease liabilities | 110,287 | 5,649 | ||||
Warranty provision | 557,217 | 307,571 | ||||
Other carryforward balances | 94,199 | 2,315 | ||||
Share issue costs | 413,177 | 567,382 | ||||
Unrecognized deferred tax assets | (11,863,970 | ) | (9,974,043 | ) | ||
Net deferred income tax asset | $ | - | $ | - |
As at March 31, 2023 and March 31, 2022 the Company has approximately $16,025,000 and $12,391,000 respectively, of non-capital losses carry forwards available to reduce Canadian taxable income for future years. As at March 31, 2023 and March 31, 2022 the Company has approximately $22,640,000 and $17,693,000 respectively, of net operating losses carry forwards available to reduce future taxable income in the United States. The losses in Canada and United States expire between 2030 and 2043 if unused. The potential benefits of these carry-forward non-capital losses has not been recognized in these consolidated financial statements as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered.
21. Acquisition of Lion Truck Body
On July 7, 2022 GreenPower entered into an asset purchase agreement with Lion Truck Body Inc., a truck body manufacturer located in Torrance, CA, under which Greenpower has purchased all of the assets of the business through its wholly owned subsidiary, Lion Truck Body Incorporated. GreenPower completed the acquisition in order to offer a broader product offering and to reduce the time for customers looking for a completed truck body and has accounted for the acquisition of the assets of Lion Truck Body Inc. as a business combination under IFRS 3. The purchase price of $240,000 is subject to a working capital adjustment of $152,873 which results in a determination of the fair value of the cash investment for the acquisition of $87,127.
As part of the acquisition GreenPower assumed a term loan issued by an agency of the US federal government, with a principal balance of approximately $1.5 million as at July 7, 2022, an interest rate of 3.75%, a maturity in May 2050, and fixed monthly payments. GreenPower has determined that the fair value of the term loan as at the acquisition date, assuming a market rate of interest, is approximately $0.6 million. Management has determined that the below market rate of interest on the loan represents government assistance and has accounted for this assistance in accordance with IAS 20, by booking a deferred benefit of government assistance of $0.7 million at the acquisition date, which will be recognized in earnings over the term of the loan. The determination of the fair value of the assumed loan and of the deferred benefit of government assistance requires management to make a number of critical assumptions and estimates, such as the incremental borrowing rates as at the acquisition date. These assumptions and estimates had a significant impact on the carrying value of these liabilities, and the determination that there was goodwill paid on the transaction. Based on management's determination of the fair value of consideration transferred and of the net assets acquired, GreenPower recorded goodwill of $250,832 on the acquisition. goodwill was tested for impairment as at March 31, 2023, and was written down due to management's determination that the future cash flows that are expected to be generated by the business would be insufficient to support goodwill or intangible assets at the entity. This determination involves the use of estimates and assumptions about future events that had a negative impact on the loss for the year ended March 31, 2023.
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
21. Acquisition of Lion Truck Body (continued)
Since the date of acquisition the impact on revenues for the period ending March 31, 2023 was $1,897,605. The impact to consolidated earnings over the same period was ($864,996), which includes the goodwill writedown of $250,832.
The table below reflects management's determination of the fair value of major categories of assets acquired, liabilities assumed and consideration transferred as at the acquisition date.
Fair value of consideration transferred | |||
Purchase price | $ | 240,000 | |
less: Working capital adjustment | (152,873 | ) | |
Cash purchase price | $ | 87,127 | |
Fair value of net assets acquired | |||
Accounts receivables | $ | 127,852 | |
Inventory | 786,688 | ||
Equipment | 268,252 | ||
Right of use asset | 448,512 | ||
Goodwill | 250,832 | ||
Accounts payable | (83,562 | ) | |
Lease liabilities | (433,512 | ) | |
Deferred benefit of government assistance | (699,327 | ) | |
Loans | (578,608 | ) | |
Total | $ | 87,127 |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
22. Segmented Information
The Company operates in one reportable operating segment, being the manufacture and distribution of all- electric commercial vehicles and transit, school and charter buses.
During the year ended March 31, 2023, the Company was economically dependent on one (2022 - three, 2021 - three) customer(s) who accounted for more than 10% of revenue from continuing operations and in aggregate accounted for approximately 59%, (2022: 57%, 2021: 87%) of sales.
The Company's disaggregated revenue for the years ended March 31, 2023, 2022, and 2021 is summarized in the following table. Included in Vehicle sales and in Revenue from operating and finance leases for the year ended March 31, 2023 is $4,614,250 (2022 - $2,970,387, 2021 - $5,765,000) in proceeds received from government vouchers for sales made to customers or lessees. Included in Vehicle sales for the year ended March 31, 2023 is $nil (2022 - $1,929,800, 2021 - $2,175,000) from the sales of vehicles that were previously on lease where the leases were cancelled and the vehicles subsequently sold.
For the Years Ended | |||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
Vehicle and parts sales | $ | 39,311,659 | $ | 13,714,227 | $ | 3,459,311 | |||
Revenue from operating and finance leases | 113,789 | 3,297,619 | 9,590,511 | ||||||
Accretion on promissory note | - | 7,035 | 26,426 | ||||||
Finance income | 270,442 | 217,892 | 209,936 | ||||||
$ | 39,695,890 | $ | 17,236,773 | $ | 13,286,184 |
The Company's revenues allocated by geography based on the customer's country of domicile,for the years ended March 31, 2023, 2022, and 2021, is as follows:
For the Years Ended | |||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
United States of America | $ | 39,497,713 | $ | 15,972,137 | $ | 13,045,040 | |||
Canada | 198,177 | 1,264,636 | 241,144 | ||||||
Total | $ | 39,695,890 | $ | 17,236,773 | $ | 13,286,184 |
The Company's property and equipment allocated by geography for the years ended March 31, 2023, and
2022 is as follows:
For the Years Ended | ||||||
March 31, 2023 | March 31, 2022 | |||||
United States of America | $ | 2,485,711 | $ | 3,296,564 | ||
Canada | 119,080 | 146,753 | ||||
Total | $ | 2,604,791 | $ | 3,443,317 |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
23. Litigation and Legal Proceedings
The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote or estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non- payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company, and the Company is evaluating its response to this claim (Note 25).
24. Supplemental Cash Flow Disclosure
The following table provides additional detail regarding the Company's cash flow:
For the Years Ended | |||||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||||
Non-cash investing and financing transactions: | |||||||||||
Fair value of stock options exercised | $ | 6,333 | $ | 1,139,621 | $ | 164,869 | |||||
Fair value of warrants exercised | $ | - | $ | 994,161 | $ | 772,408 | |||||
Shares issued for conversion of debentures | $ | - | $ | - | $ | 3,404,693 | |||||
Right of use asset acquired | $ | 4,968,446 | $ | - | $ | - | |||||
Right of use asset from business combination | $ | 448,512 | $ | - | $ | - | |||||
Equipment acquired in business combination | $ | 268,252 | $ | - | $ | - | |||||
Accounts receivables acquired in business combination | $ | 127,852 | $ | - | $ | - | |||||
Inventory acquired in business combination | $ | 786,688 | $ | - | $ | - | |||||
Goodwill acquired in business combination | $ | 250,832 | $ | - | $ | - | |||||
Accounts payable assumed in business combination | $ | 83,562 | $ | - | $ | - | |||||
Lease liabilities assumed in business combination | $ | 433,512 | $ | - | $ | - | |||||
Loans assumed in business combination | $ | 578,608 | $ | - | $ | - | |||||
Deferred benefit of government assistance from business combination | $ | 699,327 | $ | - | $ | - | |||||
Accrued value of inventory included in AP | $ | 373,000 | $ | - | $ | - | |||||
Accrued financing cost included in deferred revenue | $ | 324,967 | $ | - | $ | - | |||||
Accretion income on promissory note receivable | $ | - | $ | 7,034 | $ | (26,426 | ) | ||||
Accretion expense on convertible debt | $ | - | $ | - | $ | 378,687 | |||||
Accrued interest on paycheck protection program loan | $ | - | $ | - | $ | 3,378 | |||||
Property and equipment through financing | $ | - | $ | 42,831 | $ | - | |||||
Assets transferred from Inventory to Property and equipment | $ | - | $ | 1,408,813 | $ | 271,291 |
GREENPOWER MOTOR COMPANY INC. Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
25. Events After the Reporting Period
Subsequent to the end of the reporting period:
• Between April 1, 2023 and April 17, 2023 the Company issued a total of 188,819 shares under the ATM program at a weighted average price of $2.7587 per share for gross proceeds of $520,892 before transaction fees.
• Between April 13, 2023 and May 1, 2023 the Company issued 42,858 common shares pursuant to the exercise of stock options at an exercise price of CDN$3.50 per share for gross proceeds of CDN$150,003.
• On May 4, 2023 14,286 stock options exercisable at CDN$3.50 per share expired unexercised.
• Between April 1 2023 and June 30, 2023, 74,761 stock options exercisable at a weighted average share price of $5.54 were forfeited.
• During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non- payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company (Note 23).
• On June 2, 2023, GreenPower repaid a CAD $250,000 promissory note, plus accrued and unpaid interest on the note, to a company that is beneficially owned by a Director of the Company.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Introduction
This Management's Discussion and Analysis ("MD&A") is dated July 14, 2023 unless otherwise indicated and should be read in conjunction with the audited consolidated financial statements of GreenPower Motor Company Inc. ("GreenPower", "the Company", "we", "our" or "us") for the year ended March 31, 2023 and the related notes, and the Company's filings through the U.S. Securities and Exchange Commission, as filed on EDGAR. This MD&A was written to comply with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations. Results are reported in US dollars, unless otherwise noted. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results presented for the three months and year ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future period. The consolidated financial statements are prepared in compliance with International Financial Reporting Standards, as issued by the IASB. The Company's IFRS accounting policies are set out in Note 2 of the audited consolidated financial statements.
For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.
Further information about the Company and its operations can be obtained from the offices of the Company or from www.sedar.com. Information in these websites do not form part of this report and are not incorporated by reference.
Cautionary Note Regarding Forward-Looking Information
Certain statements contained in the following MD&A may contain forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements in this MD&A may include, but are not limited to statements involving estimates, assumptions or judgements, and these statements may be identified by words such as "believe", "expect", "expectation", "aim", "achieve", "intend", "commit", "goal", "plan", "strive" and "objective", and similar expressions of future or conditional verbs such as "will", "may", "might", "should", "could" or "would". By their very nature, forward- looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our plans, goals, expectations and objectives will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements.
Non-IFRS Measures and Other Supplementary Performance Metrics
This MD&A includes certain non-IFRS measures and other supplementary performance metrics, which are defined below. These measures do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are therefore unlikely to be comparable to similar measures presented by other companies. Investors are cautioned that non-GAAP financial measures should not be construed as an alternative to IFRS measures. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. Readers should not rely on any single financial measure to evaluate GreenPower's business.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
This MD&A refers to Adjusted EBITDA "Adjusted EBITDA", a non-IFRS measure, which is defined as loss for the year (for annual periods) or loss for the period (for quarterly periods), plus depreciation, plus interest and accretion, plus share-based payments, plus / (less) the allowance / (recovery) for credit losses, plus / (less) the increase / (decrease) in the warranty liability, plus taxes. Adjusted EBITDA is a measure used by management as an indicator of profitability since it excludes the impact of movements in working capital items, certain non-cash charges, and financing costs. Therefore, Adjusted EBITDA gives the investor information as to the profitability of the business. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Adjusted EBITDA as calculated by GreenPower may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable IFRS measure to Adjusted EBITDA is net income.
This MD&A also makes reference to "Total Cash Expenses", a non-IFRS measure, which is defined as sales, general and administrative costs plus interest and accretion, plus/(less) foreign exchange loss/(gain), less depreciation, less share-based payments less amortization of deferred financing fees, plus/(less) the decrease/(increase) in warranty liability, plus / (less) the (allowance) / recovery for credit losses. Total Cash Expenses is a measure used by management as an indicator of sales, general and administrative, interest and accretion, and foreign exchange costs that excludes the impact of certain non-cash charges. Management believes that Total Cash Expenses provides a measure of cash expenses from the operations of the business. However, Total Cash Expenses is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Total Cash Expenses as calculated by GreenPower may not be comparable to Total Cash Expenses as calculated and reported by other companies.
This MD&A also makes reference to "Vehicle Deliveries", a supplementary performance metric, that management believes provides useful information regarding the business activity of the Company during a quarter or year. Vehicle Deliveries is vehicles that have been sold or leased to a customer during a quarter or a year, as determined by management. The models of vehicles included in Vehicle Deliveries will vary over time, such that Vehicle Deliveries in one period may not be comparable to Vehicle Deliveries in another period. Vehicle Deliveries is not a financial metric, and vehicle deliveries is not an indication of the Company's financial performance in a given period. While management considers Vehicle Deliveries to be a useful supplementary performance metric, users are cautioned to consider other factors to evaluate GreenPower's business.
Description of Business
GreenPower designs, builds and distributes a full suite of high-floor and low-floor all-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo vans and a cab and chassis. GreenPower employs a clean-sheet design to manufacture all-electric buses that are purpose built to be battery powered with zero emissions while integrating global suppliers for key components. This Original Equipment Manufacturer ("OEM") platform allows GreenPower to meet the specifications of various operators while providing standard parts for ease of maintenance and accessibility for warranty requirements. GreenPower was founded in Vancouver, British Columbia, Canada with primary operational facilities in southern California. Listed on the TSX Venture Exchange since November 2015, GreenPower completed its U.S. IPO and NASDAQ listing in August 2020. For further information go to www.greenpowermotor.com.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Operations
The following is a description of GreenPower's business activities during the year ended March 31, 2023. During the year, the Company delivered a total of 299 vehicles, which were comprised of 226 EV Star CC's, 40 EV Star 22-foot cargo, 3 EV Star Cargo Plus, 19 EV Stars, 7 BEAST Type D school buses, 2 Nano BEAST Type A school buses, and 2 EV 250's. During the year GreenPower generated record annual revenue of $39.7 million, which was an increase of 130% over the prior year.
During the quarter ended June 30, 2022, GreenPower completed the sale of 3 BEAST Type D all-electric school buses, 2 EV Star Plus, 1 EV Star Cargo Plus, 5 EV Star 22-foot cargo, 6 EV Stars and 4 EV Star Cab and Chassis. During the quarter management was focused on progressing production of EV Star CC's for fulfilment of a customer contract, on completing diligence for the acquisition of Lion Truck Body, and on planning for the possession of the manufacturing facility in West Virginia.
During the three-month period ended September 30, 2022, GreenPower completed the sale of 3 BEAST Type D all-electric school buses, 1 Nano BEAST Type A all-electric school bus, 18 EV Star 22-foot cargo, 3 EV Stars and 29 EV Star Cab and Chassis. The Company also took possession of the 80,000 square foot school bus manufacturing facility in West Virginia, and over the course of the year has been hiring and training employees, including a plant manager with significant automotive manufacturing experience who will oversee the facility's operations. The Company has been preparing the plant for production which is planned to commence over the next several quarters.
GreenPower also completed the acquisition of Lion Truck Body ("Lion") during July 2022. Lion manufactures and installs a complete line of truck bodies including dry-freight aluminum, refrigerated box, aluminum beds, stake bed, flat bed and service body. This acquisition allows GreenPower to vertically integrate an important component of its supply chain, and GreenPower intends to leverage the business's capabilities to capture new lines of business and improve its product offering for customers. Over the course of the year GreenPower has brought in changes in management, key staff, and has implemented operational improvements. In addition, we developed two new products: an all-electric reefer body, and a lightweight aluminum stake bed, both built on the EV Star cab and chassis platform.
During the quarter ended December 31, 2022, GreenPower completed the sale of 1 Nano BEAST Type A all-electric school bus, 10 EV Star 22-foot cargo, 5 EV Stars and 85 EV Star Cab and Chassis ("CC's"). The record number of vehicle deliveries during the quarter were the culmination of significant management effort overcoming logistics bottlenecks, managing a global supply chain, working capital constraints and other factors. This effort resulted in record quarterly revenue that continued to accelerate in the fourth quarter.
During the fourth quarter ended March 31, 2023 Greenpower sold 108 EV Star CC's, 6 EV Star Cargos, 3 EV Star Cargo Plus, 3 EV Stars, 1 BEAST Type D school bus, 2 EV 250's. These deliveries generated another quarter of record revenue for the Company, which resulted in the highest ever annual revenue for the Company of $39.7 million, which was an increase of 130% from the prior year.
During the year ended March 31, 2023 GreenPower's business grew significantly. More importantly, management remained focused on expanding its platform and management capabilities, and on progressing initiatives that are expected to further diversify and expand the business going forward. First, the Company's development of the West Virginia school bus manufacturing facility is expanding and diversifying the Company's production capabilities and is laying the groundwork for future sales of all- electric school buses. Second, the Company expanded its dealer network into several new states during the year and continues to enter new markets in North America.
As at March 31, 2023, the Company had:
• Property and equipment on the balance sheet totaling $2.6 million, comprised of several models of GreenPower vehicles used for demonstration and other purposes, company vehicles used for sales, service and operations, tools and equipment, and other business property and equipment;
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
• Work in process and parts inventory totaling approximately $9.7 million representing EV Star's, EV 250's, BEAST Type D school buses, Nano BEAST Type A school buses and parts inventory, and;
• Finished goods inventory totaling approximately $31.9 million, comprised of EV Star cab and chassis and other EV Star models, and BEAST Type D and Nano BEAST Type A models.
Trends
The Company does not know of any trends, commitments, events, or uncertainty that are expected to have a material effect on the Company's business, financial condition, or results of operations other than as disclosed herein under "Risk Factors" and the paragraph below.
Annual Results of Operations
Year ended March 31, 2023
For the year ended March 31, 2023 the Company generated revenue of $39,695,890 compared to $17,236,773 for the previous year, an increase of 130.3%. Cost of sales of $32,445,836 yielding a gross profit of $7,250,054 or 18.3% of revenue. Revenue for the year was generated from the sale of 226 EV Star CC's, 40 EV Star 22 foot cargo, 3 EV Star Cargo Plus, 19 EV Stars, 7 BEAST Type D school buses, 2 Nano BEAST Type A school buses, and 2 EV 250's, as well as revenue from truck body manufacturing, revenue from the sale of vehicle parts and service, from vehicle transportation, from finance income, and revenue from finance and operating leases. Operating costs consist of salaries and administration of $7,394,085 relating to salaries, employee benefits, and administrative services; transportation costs of $324,773 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $1,801,665; travel, accommodation, meals and entertainment costs of $748,299 related to travel for project management, demonstration of company products, and trade shows; product development costs of $2,090,338; sales and marketing costs of $818,289 interest and accretion of $1,549,769; professional fees of $1,477,094 consisting of legal and audit fees; as well as non-cash expenses including $3,645,893 of share-based compensation expense, depreciation of $1,219,223, and an allowance for credit losses of $95,153. The remaining operating costs for the period amounted to $920,468 in office expenses, other income of $72,867 from the gain on sale of Property in California, a foreign exchange loss of $30,897 and a write down of $250,832 of goodwill recognized on the acquisition of Lion Truck Body, resulting in a consolidated net loss of $14,793,025. The consolidated total comprehensive loss for the year was impacted by $13,007 of other comprehensive loss as a result of the translation of the entities with a different functional currency than presentation currency.
Year ended March 31, 2022
For the year ended March 31, 2022 the Company generated revenue of $17,236,773 compared to $13,286,184 for the previous year, an increase of 29.7%. Cost of sales of $13,360,068 yielding a gross profit of $3,876,705 or 22.5% of revenue. Revenue for the year was generated from the sale of 18 BEAST school buses, 11 EV Stars, 4 EV Star + and 21 EV Star cab and chassis, as well as 1 EV Star and 10 EV Star CC's for which the Company provided lease financing, and 28 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles were subsequently sold. Operating costs consist of administrative fees of $5,807,744 relating to salaries, project management, finance, and administrative services; transportation costs of $231,472 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $1,244,505; travel, accommodation, meals and entertainment costs of $641,500 related to travel for project management, demonstration of company products, and trade shows; product development costs of $1,381,101; sales and marketing costs of $686,544; interest and accretion of $515,618; professional fees of $1,207,920 consisting of legal and audit fees; as well as non-cash expenses including $5,771,475 of share-based compensation expense, depreciation of $661,958, and an allowance for credit losses of $8,940. The remaining operating costs for the period amounted to $419,398 in office expenses, other income of $364,296 primarily related to the forgiveness of a Payroll protection Loan, a foreign exchange loss of $65,117 and a write down of assets of $607,579 resulting in a consolidated net loss of $15,009,920.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
The consolidated total comprehensive loss for the year was impacted by $39,413 of other comprehensive loss as a result of the translation of the entities with a different functional currency than presentation currency.
Year ended March 31, 2021
For the year ended March 31, 2021 the Company generated revenue of $13,286,184 compared to $14,397,158 for the previous year, a decrease of 7.7%. Cost of sales of $9,706,044 yielding a gross profit of $3,580,140 or 26.9% of revenue. Revenue for the year was generated from the sale of 33 EV Stars, from the lease of 35 EV Stars, from the lease of 5 EV 250s, from lease income, and from the sale of chargers, and parts. Operating costs consist of administrative fees of $3,747,761 relating to salaries, project management, finance, and administrative services; transportation costs of $161,017 which relate to the use of trucks, trailers, tractors as well as other operational costs needed to transport company products around North America; insurance expense of $596,932; travel, accommodation, meals and entertainment costs of $217,023 related to travel for project management, demonstration of company products, and trade shows; product development costs of $939,949; sales and marketing costs of $234,445; interest and accretion of $1,598,588; professional fees of $486,425 consisting of legal and audit fees; as well as non-cash expenses including $2,098,761 of share-based compensation expense, depreciation of $437,263, and an allowance for credit losses of $333,929. The remaining operating costs for the period amounted to $325,324 in office expenses, a foreign exchange loss of $193,798 and a write down of assets of $45,679 resulting in a consolidated net loss of $7,836,754.
The consolidated total comprehensive loss for the year was impacted by $21,169 of other comprehensive income as a result of the translation of the entities with a different functional currency than presentation currency.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Comparison of Annual Results
The following table compares the annual results of GreenPower for the years ended March 31, 2023, 2022 and 2021:
For the years ended | Percentage Change | $ Change | |||||||||||||||||||
March 31, | March 31, | March 31, | 2023 to | 2022 to | 2023 to | 2022 to | |||||||||||||||
2023 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
Revenue | $ | 39,695,890 | $ | 17,236,773 | $ | 13,286,184 | 130.3% | 29.7% | $ | 22,459,117 | $ | 3,950,589 | |||||||||
Cost of sales | 32,445,836 | 13,360,068 | 9,706,044 | 142.9% | 37.6% | 19,085,768 | 3,654,024 | ||||||||||||||
Gross Profit | 7,250,054 | 3,876,705 | 3,580,140 | 87.0% | 8.3% | 3,373,349 | 296,565 | ||||||||||||||
Gross profit margin¹ | 18.3% | 22.5% | 26.9% | -4.2% | -4.5% | ||||||||||||||||
Sales, general and administrative costs | |||||||||||||||||||||
Salaries and administration | 7,394,085 | 5,807,744 | 3,747,761 | 27.3% | 55.0% | 1,586,341 | 2,059,983 | ||||||||||||||
Depreciation | 1,219,223 | 661,958 | 437,263 | 84.2% | 51.4% | 557,265 | 224,695 | ||||||||||||||
Product development costs | 2,090,338 | 1,381,101 | 939,949 | 51.4% | 46.9% | 709,237 | 441,152 | ||||||||||||||
Office expense | 920,468 | 419,398 | 325,324 | 119.5% | 28.9% | 501,070 | 94,074 | ||||||||||||||
Insurance | 1,801,665 | 1,244,505 | 596,932 | 44.8% | 108.5% | 557,160 | 647,573 | ||||||||||||||
Professional fees | 1,477,094 | 1,207,920 | 486,425 | 22.3% | 148.3% | 269,174 | 721,495 | ||||||||||||||
Sales and marketing | 818,289 | 686,544 | 234,445 | 19.2% | 192.8% | 131,745 | 452,099 | ||||||||||||||
Share-based payments | 3,645,893 | 5,771,475 | 2,098,761 | -36.8% | 175.0% | (2,125,582 | ) | 3,672,714 | |||||||||||||
Transportation costs | 324,773 | 231,472 | 161,017 | 40.3% | 43.8% | 93,301 | 70,455 | ||||||||||||||
Travel, accommodation, meals and entertainment | 748,299 | 641,500 | 217,023 | 16.6% | 195.6% | 106,799 | 424,477 | ||||||||||||||
Allowance for credit losses | 95,153 | 8,940 | 333,929 | 964.4% | -97.3% | 86,213 | (324,989 | ) | |||||||||||||
Total sales, general and administrative costs | 20,535,280 | 18,062,557 | 9,578,829 | 13.7% | 88.6% | 2,472,723 | 8,483,728 | ||||||||||||||
Loss from operations before interest, accretion and foreign exchange | (13,285,226 | ) | (14,185,852 | ) | (5,998,689 | ) | -6.3% | 136.5% | 900,626 | (8,187,163 | ) | ||||||||||
Interest and accretion | (1,549,769 | ) | (515,668 | ) | (1,598,588 | ) | 200.5% | -67.7% | (1,034,101 | ) | 1,082,920 | ||||||||||
Other Income | 72,867 | 364,296 | - | NM | NM | (291,429 | ) | 364,296 | |||||||||||||
Foreign exchange loss | (30,897 | ) | (65,117 | ) | (193,798 | ) | -52.6% | -66.4% | 34,220 | 128,681 | |||||||||||
Loss from operations for the year | (14,793,025 | ) | (14,402,341 | ) | (7,791,075 | ) | 2.7% | 84.9% | (390,684 | ) | (6,611,266 | ) | |||||||||
Other item | - | - | |||||||||||||||||||
Write down of assets | (250,832 | ) | (607,579 | ) | (45,679 | ) | -58.7% | NM | 356,747 | (561,900 | ) | ||||||||||
Loss for the year | (15,043,857 | ) | (15,009,920 | ) | (7,836,754 | ) | 0.2% | 91.5% | (33,937 | ) | (7,173,166 | ) | |||||||||
Other comprehensive | |||||||||||||||||||||
income / (loss) | |||||||||||||||||||||
Cumulative translation reserve | (13,007 | ) | (39,413 | ) | 21,169 | NM | NM | 26,406 | (60,582 | ) | |||||||||||
Total comprehensive loss for the year | $ | (15,056,864 | ) | $ | (15,049,333 | ) | $ | (7,815,585 | ) | NM | NM | $ | (7,531 | ) | $ | (7,233,748 | ) | ||||
Loss per common share, basic and diluted | $ | (0.64 | ) | $ | (0.69 | ) | $ | (0.43 | ) | -7.2% | 60.5% | $ | 0.05 | $ | (0.26 | ) | |||||
Weighted average number of common shares outstanding, basic and diluted | 23,522,755 | 21,877,488 | 18,116,129 | 7.5% | 20.8% | 1,645,267 | 3,761,359 |
(1) Gross profit margin, a supplementary financial metric, is calculated as gross profit divided by revenue. Gross profit margin is not a defined term under IFRS.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Change in Revenue
The annual increase in revenue for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $22,459,117 or 130.3%. This increase was the result of an additional 206 vehicles delivered during the year ended March 31, 2023 compared to the prior year.
The annual increase in revenue for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $3,950,589 or 29.7%. This increase was the result of an additional 31 vehicles delivered during the year ended March 31, 2022 compared to the prior year.
Change in Cost of Sales and Gross Profit and Gross Profit Margin
The annual increase in cost of sales for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $19,085,768 or 142.9%, resulting in an increase in gross profit of $3,373,349 or 87.0%. During the year ended March 31, 2023 GreenPower delivered a total of 299 vehicles compared to 93 in the prior year, an increase of 206 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales, which was primarily comprised of lower cost vehicle models, as well as an increase in shipping and other conversion costs included in cost of sales.
The annual increase in cost of sales for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $3,654,024 or 37.6%, resulting in an increase in gross profit of $296,565 or 8.3%. During the year ended March 31, 2022 GreenPower delivered a total of 93 vehicles compared to 62 in the prior year, an increase of 31 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales.
Gross profit margin (defined as gross profit over sales) for the years ended March 2023, 2022 and 2021 was 18.3%, 22.5% and 26.9% respectively. Gross profit margin declined by 4.2% between March 31, 2023 and March 31, 2022 due to increased sales under a high volume contract, which were at a lower gross profit margin than sales in the prior year, which were primarily comprised of lower volume sales at a higher gross profit margin. In addition, the decline in gross profit margin during the year ended March 31, 2023 compared to the prior year was due to an increase in shipping costs that was driven by a higher percentage of sales outside of the state of California, compared to the prior year. Gross profit margin declined by 4.5% between March 31, 2022 and March 31, 2021 due to the product mix of sales, including sales of BEAST school buses and EV Star Cargos at a lower margin than sales during the year ended March 31, 2021.
Change in Salaries and Administration
The annual increase in salaries and administration expense for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $1,586,341 or 27.3%. There were 112 employees at March 31, 2023 and 69 employees at March 31, 2022 due to the expansion of our business in West Virginia, and in California primarily due to the acquisition of Lion Truck Body, which increased salary expense. In addition, the increase was also due to salary increases for existing employees, and due to the implementation of a defined contribution retirement plan for US employees.
The annual increase in salaries and administration expense for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $2,059,983 or 55.0%. There were 69 employees at March 31, 2022 and 55 employees at March 31, 2021, and the increase in salary and administration expense was due to an increase in the number of employees, due to salary increases, commissions and bonuses paid to existing employees, due to the implementation of a defined contribution retirement plan for US employees, and due to an increase in other administration costs.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Change in Depreciation
The annual increase in depreciation for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $557,265 or 84.2%. Approximately $340,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year, including assets acquired in the Lion Truck Body acquisition.
The annual increase in depreciation for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $224,695 or 51.4%. The increase in depreciation during the year was due to increased depreciation of property, plant and equipment, which was partially offset by a reduction in depreciation on right of use assets.
Change in Product Development Costs
The annual increase in product development costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $709,237 or 51.4%. This increase was due to increased warranty expense accrual, which is a fixed percentage of sales, offset by a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
The annual increase in product development costs for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $441,152 or 46.9%. This increase was primarily due to increased warranty expense accrual, which is a fixed percentage of sales, as well as an increase in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
Change in Share-Based Payments
Share based payments for the year ended March 31, 2023 compared to the prior year declined by $2,125,582 or (36.8%). For the year ended March 31, 2022 there was an increase in share based payments expense of $3,672,714 or 175.0%. Share based payment expense is for non-cash stock option grants, where the value of stock option grants are calculated on the date of the grant and recognized in earnings over the stock option's vesting period. The reduction in share based payment expense during the year ended March 31, 2023 compared to the prior year was due to a lower stock option expense recognized during the year ended March 31, 2023 compared to the year ended March 31, 2022, and due to an increase in forfeited stock options during the year ended March 31, 2023, which reduced share based payments expense. The increase in share-based payment expense during the year ended March 31, 2022 compared to the prior year was from an increase in stock option expense recognized compared to the prior year, primarily from stock options granted during the year ended March 31, 2022 and during the year ended March 31, 2021.
Change in Transportation Costs
The annual increase in transportation costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $93,301 or 40.3%. This increase was due to increased costs related to shipping vehicles for non-sales purposes, as well as for expenses associated with company vehicles and transportation.
The annual increase in transportation costs for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $70,455 or 43.8%. This increase was primarily due to increased company vehicle expenses during the year ended March 31, 2022, which was driven by increased business activity compared to the year ended March 31, 2021, which was negatively impacted by COVID related factors.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Change in Interest and Accretion
Interest and accretion increased in the year ended March 31, 2023 compared to the year ended March 31, 2022 by $1,034,101, or 200.5%, and decreased by $1,082,920 or 67.7% in the year ended March 31, 2022 compared to the year ended March 31, 2021. The increase in interest and accretion expense in the year ended March 31, 2023 compared to the prior year was due to an increase in interest bearing debt during the year, including loans from related parties, the term loan assumed in the acquisition of Lion Truck Body, as well as due to the increase on the variable rate of interest on the Company's $8 million operating line of credit, which increased by 4.0% over the year. In addition, the increase was due to non-cash interest expense associated with deferred revenue. The decrease in interest and accretion expense in the year ended March 31, 2022 compared to the prior year was due to a reduction in the average daily outstanding balance of interest bearing debt and due to a reduction in deferred financing fees included in interest and accretion during the year ended March 31, 2022 compared to the prior year.
Change in Other Income
During the years ended March 31, 2023, GreenPower recognized other income of $72,867 from the gain on a sale of property during the year and recognized $364,296 in other income during the year ended March 31, 2022 from the forgiveness of a payroll protection loan during the year. GreenPower did not recognize other income during the year ended March 31, 2021. Changes in other income recognized during each of these years was due to these non-recurring events in each period.
Change in Office Expense
Office expense increased by $501,070 or 119.5% during the year ended March 31, 2023 compared to the prior year, and $94,074 or 28.9% during the year ended March 31, 2022 compared to the prior year. The increase in office expense during the year ended March 31, 2023 was due to increases in rental expense as well as an increase in maintenance and utilities expense both of which were primarily due to the increased number of properties leased by the Company compared to the prior year. The increase in office expense during the year ended March 31, 2022 compared to the prior year was primarily due to an increase in rental expense and building, maintenance and utilities expense due to an increase in leased office space and leased vehicle storage space.
Change in Insurance Expense
Insurance expense increased by $557,160 or 44.8% during the year ended March 31, 2023 compared to the prior year due to increased insurance requirements from a growth in GreenPower's business and operations, including from the acquisition of Lion Truck Body, from the new property lease and business expansion in West Virginia, and from growth in the Company's core business and operations.
Insurance expense increased by $647,573 or 108.5% during the year ended March 31, 2022 compared to the prior year from increases in the Company's insurance coverage requirements due to general business growth, and due to an increase in directors and officers insurance, which increased after GreenPower's Nasdaq uplisting.
Change in Professional Fees
Professional fees increased by $269,174, or 22.3%, during the year ended March 31, 2023 compared to the prior year, primarily due to an increase in audit and accounting fees. Professional fees increased by $721,495 or 148.3% during the year ended March 31, 2022 compared to the prior year due to increased legal costs associated with general corporate matters and litigation, as well as due to an increase in audit and accounting fees.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Change in Sales and Marketing and Travel, Accommodation, Meals and Entertainment
The annual increase in sales and marketing costs for the year ended March 31, 2023 compared to the prior year was $131,745 or 19.2% and was caused by a general expansion of the Company's sales and marketing activities year over year. The annual increase in sales and marketing expense for the year ended March 31, 2022 compared to the prior year was $452,099 or 192.8%, due to a return to normal levels of sales and marketing activities as Covid-19 restrictions were lifted.
Travel, accommodation, meals and entertainment expenses increased by $106,799 or 16.6% during the year ended March 31, 2023 compared to the prior year, and increased by $424,477 or 195.6% during the year ended March 31, 2022 compared to the prior year. The annual increases in both years were caused by the same factors that increased sales and marketing costs in each year.
Change in Other Costs
Annual changes in allowance for credit losses represents allowances booked against accounts receivable, net of allowances from prior periods collected in the current period.
Annual changes in foreign exchange loss is caused by the Company's exposure to changes in foreign currency exchange rates due to financial assets and liabilities in foreign currency. The Company is exposed to foreign currency risk from assets and liabilities in CDN dollars, as described in the Market risks section.
Change in Write Down of Assets
During the year ended March 31, 2023, the Company had a write down of assets of $250,832 from the write down of goodwill recognized on the acquisition of Lion Truck Body which was unrelated to the write down of assets in the prior year. The annual increase in the write down of assets for the year ended March 31, 2022 compared to the prior year was $561,900, and was due to increased write downs of all-electric buses held as Property, Plant and Equipment.
Change in Loss for the Year and Loss per Common Share
The loss for the year ended March 31, 2023 increased by $33,937, or 0.2% compared to the prior year, and was due to an increase in the Company's gross profit, which more than offset increases in the Company's selling, general and administrative costs and other expenses. The loss for the year ended March 31, 2022 increased by $7,173,166 compared to the prior year, due to an increase in the Company's selling, general and administrative costs and other expenses, which were partially offset by an increase in the Company's gross profit compared to the prior year.
Loss per common share for the year ended March 31, 2023 declined by $0.05 per share, or 7.2%, due to the reduction in the loss for the year and the increase in the weighted average number of shares outstanding. Loss per common share for the year ended March 31, 2022 increased by $0.26 per share, or 60.5%, due to the increase in the loss for the year which was partially offset by the increase in the weighted average number of shares outstanding.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Changes in Consolidated Statements of Financial Position
The table below illustrates changes in selected components of GreenPower's consolidated financial position as of March 31, 2023 and March 31, 2022, and an explanation of changes in these components.
(Expressed in US Dollars) |
March 31, 2023 | March 31, 2022 | Annual Change ($) | Explanation | |||||||
Cash and restricted cash | $ | 600,402 | $ | 6,888,322 | (6,287,920 | ) | See liquidity and capital resources sections of this report | ||||
Accounts receivable, net of allowances | 10,273,376 | 2,916,991 | 7,356,385 | Increase due to higher sales volumes in fiscal 2023 compared to fiscal 2022. | |||||||
Inventory | 41,609,234 | 32,254,854 | 9,354,380 | Increase is primarily comprised of investments in vehicle WIP and finished goods to support higher sales volumes, as well as vehicle parts inventory. | |||||||
Current assets | 54,156,170 | 43,095,077 | 11,061,093 | Increase is primarily due to increases in accounts receivable and inventory, net of a reduction in cash and restricted cash. | |||||||
Finance lease receivables | 2,970,356 | 3,395,739 | (425,383 | ) | Reduction due to lease payments received net of interest income recognized. | ||||||
Right of use assets | 4,845,738 | 116,678 | 4,729,060 | Increase primarily related to addition of West Virginia lease and addition in Lion Truck Body acquistion, net of depreciation. | |||||||
Property and equipment | 2,604,791 | 3,443,317 | (838,526 | ) | Reduction primarily related to sale of property in California | ||||||
Total assets | 63,525,183 | 49,606,932 | 13,918,251 | Primarily related to increases in current assets and right of use assets, net of reductions in finance lease receivables and property and equipment | |||||||
Line of credit | 6,612,232 | 5,766,379 | 845,853 | See liquidity and capital resources sections of this report | |||||||
Accounts payable and accrued liabilities | 7,316,267 | 1,734,225 | 5,582,042 | Primarily related to amounts due to suppliers for investments in inventory. | |||||||
Current portion of deferred revenue | 8,059,769 | 3,578,877 | 4,480,892 | Primarily related to deposits received from Workhorse | |||||||
Loans payable to related parties | 3,287,645 | - | 3,287,645 | See Related Party Transactions section of this report. | |||||||
Current liabilities | 26,500,278 | 11,513,607 | 14,986,671 | Primarily related to increases in accounts payable, current portion of deferred revenue, and loans payable to related parties. | |||||||
Long term portion of Deferred revenue | 1,938,840 | 2,935,835 | (996,995 | ) | Primarily related to deferred revenue received in prior year that was recognized in revenue during the year ended March 31, 2023 for vehicle deliveries. | ||||||
Lease liabilities | 5,239,851 | 120,609 | 5,119,242 | Increase due to increases in Right of Use Assets. | |||||||
Term loan | 610,218 | - | 610,218 | Term loan assumed in acquisition of Lion Truck Body. | |||||||
Deferred benefit on government grant | 686,341 | - | 686,341 | Present value of low interest rate benefit on assumed term loan to be recognized in income over the term of | |||||||
Warranty liability | 2,077,749 | 1,042,983 | 1,034,766 | Increase due to warranty accrual on sales, net of warranty disbursements, during the year ended March 31, 2023. | |||||||
Total liabilities | 35,863,177 | 15,221,739 | 20,641,438 | Due to increases in accounts payable, deferred revenue, loans payable to related parties, lease liabilities, term loan and contingent gain. | |||||||
Shareholder's equity | $ | 27,662,006 | $ | 34,385,193 | (6,723,187 | ) | Reduction due to increase in accumulated deficit, partially offset by increases in share capital from shares sold through the At the Market Equity offering and increases in reserves from stock options. |
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Cash flows
The following table summarizes cash flows from, and used in, operations, investing, financing, as well as the effect of foreign exchange, for the years ended March 31, 2023, 2022 and 2021:
For the years ended | |||||||||
March 31, | March 31, | March 31, | |||||||
2023 | 2022 | 2021 | |||||||
Cash flow from (used in) operations | $ | (14,757,939 | ) | $ | (20,343,748 | ) | $ | (16,392,222 | ) |
Cash flow from (used in) investing | 303,191 | (536,093 | ) | (352,682 | ) | ||||
Cash flow from (used in) financing | 8,189,280 | 12,664,774 | 31,523,631 | ||||||
Foreign exchange on cash and restricted cash | (22,452 | ) | (104,559 | ) | (22,384 | ) | |||
Net (decrease) increase in | |||||||||
cash and restricted cash | $ | (6,287,920 | ) | $ | (8,319,626 | ) | $ | 14,756,343 |
Operating activities
Cash flow used in operating activities amounted to $14.8 million for the year ended March 31, 2023. The Company generated a loss for the year of $15.0 million, which included approximately $5.5 million in non- cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $8.9 million, accounts receivable of $7.3 million, which were partially offset by an increase in accounts payable of $5.8 million, and an increase in deferred revenue of $3.2 million.
Cash flow used in operating activities amounted to $20.3 million for the year ended March 31, 2022. GreenPower generated a loss for the year of $15.0 million, which included approximately $7.6 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $20.9 million, accounts receivable of $1.5 million, which were partially offset by an increase in accounts payable of $192,973, and an increase in deferred revenue of $6.4 million.
Cash flow used in operating activities amounted to $16.4 million for the year ended March 31, 2021. We generated a loss for the year of $7.8 million, which included approximately $3.9 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $8.8 million, accounts receivable of $3.5 million, an increase in accounts payable of $272,318, and an increase in the warranty liability of $254,604.
Investing activities
Cash flow from investing activities was $303,191 for the year ended March 31, 2023. During the year the Company received proceeds from the disposal of property totaling $874,184, net of fees, purchases of property and equipment totaled $355,993, and the Company's cash investment in the acquisition of Lion Truck Body totaled $215,000.
Cash flow used in investing activities was $536,093 for the year ended March 31, 2022 and was comprised of investments in EV equipment, automobiles, computers, furniture, leasehold improvements and other items. Net cash used in investing activities was $352,682 for the year ended March 31, 2021 and was comprised of investments in EV equipment, automobiles, computers, furniture, leasehold improvements and other items.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Financing activities
Cash flow from financing activities amounted to $8.2 million for the year-ended March 31, 2023. During the year the Company received gross proceeds from the issuance of shares on its ATM program of $4.9 million, received loans from related parties that totaled $3.0 million, drew $845,853 on the Company's line of credit, which were partially offset by equity offering costs and principal payments on the Company's lease liabilities.
Cash flow from financing activities amounted to $12.7 million for the year-ended March 31, 2022 due to $5.8 million from the company's operating line of credit, $6.3 million from the exercise of warrants, $1.2 million from the exercise of stock options, which were partially offset by principal payments on the Company's promissory note, principal payments on lease liabilities and other factors.
Cash flow from financing activities amounted to $31.5 million for the year-ended March 31, 2021 primarily due to gross proceeds of $37.7 million from the Company's initial public offering on the Nasdaq stock exchange and concurrent private placement, offset by issuance costs and other factors, as well as proceeds from the exercise of warrants, which were partially offset by repayment of loans from related parties and repayment of the Company's line of credit, and other factors.
Quarterly Results of Operations
Three months ended March 31, 2023
For the three-month period ended March 31, 2023 the Company generated revenues of $15,304,288, cost of sales of $12,954,808 yielding a gross profit of $2,349,480, related to the sale of 108 EV Star CC's, 6 EV Star Cargos, 3 EV Star Cargo Plus, 3 EV Stars, 1 BEAST Type D school bus, 2 EV 250's, as well as revenue from truck body manufacturing, revenue from the sale of vehicle parts and service, from vehicle transportation, and revenue from finance and operating leases. Operating costs consist of administrative fees of $2,231,376 relating to salaries, project management, finance, and administrative services; transportation costs of $153,682 which related to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; insurance expense of $544,371; travel, accommodation, meals and entertainment costs of $227,118 related to travel for project management, demonstration of company products, and trade shows; product development costs of $719,906; interest and accretion of $437,284; professional fees of $406,407 consisting of legal and audit fees; as well as non-cash expenses including $468,444 of share-based compensation expense, recovery of an allowance for credit losses of $114,842 and depreciation of $402,673. Excluding a foreign exchange loss of $30,861, the remaining operating costs for the period amounted to $451,287 in general corporate expenses and a write down of goodwill of $250,832, resulting in a consolidated net loss of $3,859,919.
Three months ended March 31, 2022
For the three-month period ended March 31, 2022 the Company generated revenues of $4,313,964, cost of sales of $3,716,931 yielding a gross profit of $597,033, related to the sale of 8 BEAST school buses, 9 EV Star CC's and 2 EV Stars. Operating costs consist of administrative fees of $1,784,985 relating to salaries, project management, finance, and administrative services; transportation costs of $45,098 which related to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; insurance expense of $439,765; travel, accommodation, meals and entertainment costs of $222,419 related to travel for project management, demonstration of company products, and trade shows; product development costs of $454,426; interest and accretion of $150,083; professional fees of $415,988 consisting of legal and audit fees; as well as non-cash expenses including $2,983,653 of share-based compensation expense, allowance for credit losses of $91,176 and depreciation of $269,273. Excluding a foreign exchange loss of $571, the remaining operating costs for the period amounted to $126,964 in general corporate expenses and a write down of assets of $607,579, resulting in a consolidated net loss of $7,076,553.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Three months ended March 31, 2021
For the three-month period ended March 31, 2021 the Company generated revenues of $4,657,831, cost of sales of $3,489,800 yielding a gross profit of $1,168,031, related to the sale of 30 EV Stars that were previously on lease, the delivery of 5 EV 250s for which the Company provided lease financing and which were accounted for as finance leases, and from the sale of spare parts. Operating costs consist of administrative fees of $977,812 relating to salaries, project management, finance, and administrative services; transportation costs of $41,558 which related to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; insurance expense of $266,380; travel, accommodation, meals and entertainment costs of $38,308 related to travel for project management, demonstration of company products, and trade shows; product development costs of $296,164; interest and accretion of $175,450; professional fees of $210,448 consisting of legal and audit fees; as well as non-cash expenses including $1,278,194 of share-based compensation expense, allowance for credit losses of $338,818 and depreciation of $82,150. Excluding a foreign exchange loss of $69,256, the remaining operating costs for the period amounted to $137,352 in general corporate expenses and a write down of assets of $45,679, resulting in a consolidated net loss of $2,788,149.
A summary of selected information for each of the last eight quarters is presented below:
Three Months Ended | ||||||||||||
December 31, | September 30, | June 30, | ||||||||||
March 31, | 2022 | 2022 | 2022 | |||||||||
2023 | (Note 1) | (Note 1) | (Note 1) | |||||||||
Financial results | ||||||||||||
Revenues | $ | 15,304,288 | $ | 12,803,038 | $ | 7,737,459 | $ | 3,851,105 | ||||
Loss for the period | (3,859,919 | ) | (3,376,204 | ) | (3,482,163 | ) | (4,325,571 | ) | ||||
Basic and diluted earnings/(loss) per share | $ | (0.16 | ) | $ | (0.14 | ) | $ | (0.15 | ) | $ | (0.19 | ) |
Balance sheet data | ||||||||||||
Working capital (Note 2) | 27,655,892 | 25,660,309 | 26,643,011 | 28,331,760 | ||||||||
Total assets | 63,525,183 | 65,936,534 | 61,920,873 | 56,671,910 | ||||||||
Shareholders' equity | 27,662,006 | 27,302,791 | 29,104,670 | 31,699,459 | ||||||||
Three Months Ended | ||||||||||||
March 31, | December 31, | September 30, | June 30, | |||||||||
2022 | 2021 | 2021 | 2021 | |||||||||
Financial results | ||||||||||||
Revenues | $ | 4,313,964 | $ | 5,313,352 | $ | 4,629,371 | $ | 2,980,086 | ||||
Loss for the period | (7,076,553 | ) | (2,958,456 | ) | (2,713,288 | ) | (2,261,623 | ) | ||||
Basic and diluted earnings/(loss) per share | $ | (0.32 | ) | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.11 | ) |
Balance sheet data | ||||||||||||
Working capital (Note 2) | 31,581,470 | 29,385,551 | 31,327,058 | 31,391,694 | ||||||||
Total assets | 49,606,932 | 42,244,573 | 40,864,596 | 40,930,620 | ||||||||
Shareholders' equity | 34,385,193 | 35,372,237 | 36,700,920 | 36,967,980 |
1) - The Company has restated the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022 in the table above for (i) the allocation of certain costs of conversion to inventory pursuant to IAS 2, and (ii) the determination that certain customer deposits have a financing component pursuant to IFRS 15. For the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022, the changes increased revenue by $31,858, $10,998 and nil respectively, changed earnings / (loss) by ($7,391), ($44,928), and $20,615 respectively, changed working capital by ($31,706), ($24,315), and $20,615 respectively, changed total assets by $271,460, $220,081, and $158,315 respectively, and changed shareholder's equity by ($31,706), ($24,315) and $20,614 respectively.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
2) - Working capital defined as Total Current Assets minus Total Current Liabilities
Changes in Quarterly Results
GreenPower's revenue increased in each of the four quarters during the fiscal year ended March 31, 2023. The quarterly increase in revenues was largely driven by quarter over quarter increases in Vehicle Deliveries, but was also impacted by the acquisition of Lion Truck Body during the quarter ended September 30, 2022. Revenues in each of the four quarters ended March 31, 2023 were higher than the same quarter in the prior year due to higher Vehicle Deliveries during the current year compared to the prior year. The loss for the year ended March 31, 2023 of $15.0 million was similar to the loss for the year ended March 31, 2022 of $15.0 million, however the quarterly loss in each of the four quarters ended March 31, 2023 was greater than the comparable quarter of the prior year, with the exception of the loss for the quarter ended March 31, 2023 of $3.9 million compared to the loss of $7.0 million during the quarter ended March 31, 2022 which was largely due to higher gross profit and lower share based payment costs during the quarter ended March 31, 2023 compared to the prior year.
GreenPower's total assets increased to $63.5 million as at March 31, 2023 from $40.9 million as at June 30, 2021. The increase in assets over the period was largely the result of increases in inventory and accounts receivable, both of which were driven by higher vehicle production and revenues over the same period. During the four quarters ended March 31, 2023, GreenPower's working capital ranged between a low of $25.7 million as at December 31, 2022 and a high of $28.3 million as at June 30, 2022, compared to higher levels of working capital in each of the four quarters of the prior year, which ranged between a low of $29.4 million as at December 31, 2021 and a high of $31.6 million as at March 31, 2022. The lower working capital levels in the current year compared to the prior year was largely the result of higher current liabilities in the current year compared to the prior year, which more than offset increases in current assets in the current year compared to the prior year.
The following table summarizes Vehicle Deliveries pursuant to vehicle leases and vehicle sales for the last eight quarters:
For the three months ended | ||||
March 31, | December 31, | September 30, | June 30, | |
2023 | 2022 | 2022 | 2022 | |
Vehicle Sales | ||||
EV Star (Note 1) | 120 | 100 | 50 | 18 |
Nano BEAST and BEAST school bus | 1 | 1 | 4 | 3 |
EV 250 | 2 | 0 | 0 | 0 |
Vehicle Deliveries (Note 3) | 123 | 101 | 54 | 21 |
For the three months ended | ||||
March 31, | December 31, | September 30, | June 30, | |
2022 | 2021 | 2021 | 2021 | |
Vehicle Sales | ||||
EV Star (Note 1, 2) | 11 | 15 | 32 | 6 |
Nano BEAST and BEAST school bus | 8 | 8 | 2 | 0 |
Total | 19 | 23 | 34 | 6 |
Vehicle Leases | ||||
EV Star (Note 1, 2) | 0 | 0 | 10 | 1 |
Vehicle Deliveries (Note 3) | 19 | 23 | 44 | 7 |
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
1) Includes various models of EV Stars
2) 14 leases entered into during the quarter ended June 30, 2021 were cancelled and subsequently sold during the quarter ended September 20, 2021. These vehicles are excluded from June 30, 2021 vehicle leases and included in September
3) "Vehicle Deliveries", as reflected above, is a supplementary performance metric, that management believes provides useful information regarding the business activity of the Company during a quarter or year. Vehicle Deliveries is vehicles that have been sold or leased to a customer during a quarter or a year, as determined by management. The models of vehicles included in Vehicle Deliveries will vary over time, such that Vehicle Deliveries in one period may not be comparable to Vehicle Deliveries in another period. Vehicle Deliveries is not a financial metric, and vehicle deliveries is not an indication of the Company's financial performance in a given period. While management considers Vehicle Deliveries to be a useful supplementary performance metric, users are cautioned to consider other factors to evaluate GreenPower's business.
The following tables summarize Total Cash Expenses for the last eight quarters:
For the three months ended | ||||||||||||
December 31, | September 30, | June 30, | ||||||||||
March 31, | 2022 | 2022 | 2022 | |||||||||
2023 | (Note 1) | (Note 1) | (Note 1) | |||||||||
Total sales, general and administrative costs | $ | 5,490,422 | $ | 5,208,592 | $ | 4,718,257 | $ | 5,118,011 | ||||
Plus: | ||||||||||||
Interest and accretion | 437,284 | 465,188 | 387,661 | 259,636 | ||||||||
Foreign exchange loss/(gain) | 30,861 | - | 1,108 | (1,072 | ) | |||||||
Less: | ||||||||||||
Depreciation | (402,673 | ) | (330,522 | ) | (290,420 | ) | (195,608 | ) | ||||
Share-based payments | (468,444 | ) | (500,933 | ) | (967,341 | ) | (1,709,175 | ) | ||||
Amortization of deferred financing fees | - | - | - | - | ||||||||
(Increase)/decrease in warranty liability | (318,063 | ) | (377,218 | ) | (239,847 | ) | (99,639 | ) | ||||
(Allowance) / recovery for credit losses | 114,842 | (235,032 | ) | 53,994 | (28,957 | ) | ||||||
Total Cash Expenses (Note 2) | $ | 4,884,229 | $ | 4,230,075 | $ | 3,663,412 | $ | 3,343,196 | ||||
For the three months ended | ||||||||||||
March 31, | December 31, | September 30, | June 30, | |||||||||
2022 | 2021 | 2021 | 2021 | |||||||||
Total sales, general and administrative costs | $ | 6,916,671 | $ | 4,277,630 | $ | 3,942,146 | $ | 2,926,110 | ||||
Plus: | ||||||||||||
Interest and accretion | 150,083 | 94,103 | 87,211 | 184,271 | ||||||||
Foreign exchange loss/(gain) | 371 | 62,772 | 100 | 1,874 | ||||||||
Less: | ||||||||||||
Depreciation | (269,273 | ) | (127,210 | ) | (133,113 | ) | (132,363 | ) | ||||
Share-based payments | (2,983,653 | ) | (1,109,505 | ) | (934,804 | ) | (743,513 | ) | ||||
Amortization of deferred financing fees | (78,113 | ) | (80,808 | ) | (80,409 | ) | (177,408 | ) | ||||
(Increase)/decrease in warranty liability | 20,970 | 13,817 | (40,177 | ) | (87,412 | ) | ||||||
(Allowance) / recovery for credit losses | 91,176 | (87,644 | ) | (27,142 | ) | 14,670 | ||||||
Total Cash Expenses (Note 2) | $ | 3,848,232 | $ | 3,043,155 | $ | 2,813,812 | $ | 1,986,229 |
1) - The Company has restated the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022 in the table above for (i) the allocation of certain costs of conversion to inventory pursuant to IAS 2, and (ii) the determination that certain customer deposits have a financing component pursuant to IFRS 15. For the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022, the changes decreased total sales, general and administrative costs by $738,309, $203,337 and $214,985 respectively and increased interest and accretion by $90,627, $117,694, and $137,700 respectively.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
2) Total Cash Expenses", as reflected above, is a non-IFRS measure which is defined as sales, general and administrative costs plus interest and accretion, plus/(less) foreign exchange loss/(gain), less depreciation, less share-based payments less amortization of deferred financing fees, plus/(less) the decrease/(increase) in warranty liability, plus / (less) the (allowance) / recovery for credit losses. Total Cash Expenses is a measure used by management as an indicator of sales, general and administrative, interest and accretion, and foreign exchange costs that excludes the impact of certain non-cash charges. Management believes that Total Cash Expenses provides a measure of cash expenses from the operations of the business. However, Total Cash Expenses is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Total Cash Expenses as calculated by GreenPower may not be comparable to Total Cash Expenses as calculated and reported by other companies.
The following tables summarize Adjusted EBITDA for the last eight quarters:
For the three months ended | ||||||||||||
December 31, | September 30, | June 30, | ||||||||||
March 31, | 2022 | 2022 | 2022 | |||||||||
2023 | (Note 1) | (Note 1) | (Note 1) | |||||||||
Loss for the period | $ | (3,859,919 | ) | $ | (3,376,204 | ) | $ | (3,482,163 | ) | $ | (4,325,571 | ) |
Plus: | ||||||||||||
Depreciation | 402,673 | 330,522 | 290,420 | 195,608 | ||||||||
Interest and accretion | 437,284 | 465,188 | 387,661 | 259,636 | ||||||||
Share-based payments | 468,444 | 500,933 | 967,341 | 1,709,175 | ||||||||
Allowance / (recovery) for credit losses | (114,842 | ) | 235,032 | (53,994 | ) | 28,957 | ||||||
Increase/(decrease) in warranty liability | 318,063 | 377,218 | 239,847 | 99,639 | ||||||||
Adjusted EBITDA (Note 2) | $ | (2,348,297 | ) | $ | (1,467,311 | ) | $ | (1,650,888 | ) | $ | (2,032,556 | ) |
For the three months ended | ||||||||||||
March 31, | December 31, | September 30, | June 30, | |||||||||
2022 | 2021 | 2021 | 2021 | |||||||||
Loss for the period | $ | (7,076,553 | ) | $ | (2,958,456 | ) | $ | (2,713,288 | ) | $ | (2,261,623 | ) |
Plus: | ||||||||||||
Depreciation | 269,273 | 127,210 | 133,113 | 132,363 | ||||||||
Interest and accretion | 150,083 | 94,103 | 87,211 | 184,271 | ||||||||
Share-based payments | 2,983,653 | 1,109,505 | 934,804 | 743,513 | ||||||||
Allowance / (recovery) for credit losses | (91,176 | ) | 87,644 | 27,142 | (14,670 | ) | ||||||
Increase/(decrease) in warranty liability | (20,970 | ) | (13,817 | ) | 40,177 | 87,412 | ||||||
Adjusted EBITDA (Note 2) | $ | (3,785,690 | ) | $ | (1,553,811 | ) | $ | (1,490,841 | ) | $ | (1,128,734 | ) |
1) - The Company has restated the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022 in the table above for (i) the allocation of certain costs of conversion to inventory pursuant to IAS 2, and (ii) the determination that certain customer deposits have a financing component pursuant to IFRS 15. For the quarters ended December 31, 2022, September 30, 2022 and June 30, 2022, the changes changed earnings / (loss) by ($7,391), ($44,928), and $20,615 respectively, and increased interest and accretion by $90,627, $117,694, and $137,700 respectively.
2) "Adjusted EBITDA", as reflected above, is a non-IFRS measure, which is defined as loss for the period (for quarterly periods), or loss for the year (for annual periods) plus depreciation, plus interest and accretion, plus share-based payments, plus / (less) the allowance / (recovery) for credit losses, plus / (less) the increase / (decrease) in the warranty liability, plus taxes. Adjusted EBITDA is a measure used by management as an indicator of profitability since it excludes the impact of movements in working capital items, certain non-cash charges, and financing costs. Therefore, Adjusted EBITDA gives the investor information as to the cash generated from the operations of a business. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Adjusted EBITDA as calculated by GreenPower may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable IFRS measure to Adjusted EBITDA is net income.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Liquidity
The Company's capital management objective is to obtain sufficient capital to develop new business opportunities for the benefit of its shareholders. To meet these objectives, management monitors the Company's ongoing capital requirements on specific business opportunities on a case-by-case basis. The capital structure of the Company consists of cash, operating line of credit, the term loan, loans from related parties and equity attributable to common shareholders, consisting of issued share capital and deficit. On September 16, 2022 the Company established an at the market equity program (the ATM program) under which the Company may issue, at its discretion, up to $20 million of common shares from treasury to the public. During the period ended March 31, 2023 the Company issued a total of 1,565,268 shares under the ATM program for gross proceeds of $4,895,826. The ATM offering remains open and future shares may be issued up to the total remaining offering amount, at management's discretion.
At March 31, 2023, the Company has a cash balance of $600,402 and working capital, defined as current assets minus current liabilities, of $27,655,892. The Company's line of credit has a maximum credit limit of up to $8,000,000 and amounts available on the line of credit in excess of $5,000,000 are subject to margining requirements, and as at March 31, 2023 the Line of Credit had a drawn balance of $6,612,232. The Company manages its capital structure and makes adjustments to it based on available funds to the Company. The Company may continue to rely on additional financings and the sale of its inventory to further its operations and meet its capital requirements to manufacture EV vehicles, expand its production capacity and further develop its sales, marketing, engineering, and technical resources.
As at the date of this report, the Company has a drawn balance of nil on its operating line of credit, and a cash balance in excess of $1.5 million. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.
Capital Resources
Year ended March 31, 2023 and up to the date of this report
Authorized Share Capital
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued Share Capital:
During the year ended March 31, 2023, the Company issued a total of 1,568,590 common shares, including 1,565,268 shares issued under the At the Market Offering (ATM), and 3,322 shares from the exercise of options.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
During the year ended March 31, 2022, the Company issued a total of 2,255,478 common shares, including 1,925,656 shares from the exercise of warrants, and 329,822 shares from the exercise of options. As at March 31, 2023 and March 31, 2022 the Company had no shares held in escrow.
At the Market Offering
In September 2022 the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $20,000,000. The sale of common shares is to be made through "at-the-market distributions" ("ATM") on the NASDAQ stock exchange. During the year ended March 31, 2023, the Company sold 1,565,268 common shares under the ATM program for gross proceeds of $4,895,826.
The Company incurred approximately $217,000 in professional fees and other direct expenses in connection with the prospectus offering and the ATM, which was included in share issuance costs for the year ended March 31, 2023 (2022 - $Nil).
Between April 1, 2023 and April 17, 2023 the Company issued a total of 188,819 shares under the ATM program at a weighted average price of $2.7587 per share for gross proceeds of $520,892 before transaction fees.
The Company has two incentive stock option plans whereby it grants options to directors, officers, employees, and consultants of the Company, the 2023 Equity Incentive Plan (the "2023 Plan") which was adopted in order to grant awards to people in the United States, and the 2022 Equity Incentive Plan (the "2022 Plan").
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our Annual General Meeting on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non- stock option awards means a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards. No stock options have been issued under the 2023 Plan as at March 31, 2023.
2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified on February 21, 2023, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed 2,467,595. No performance-based awards have been issued as at March 31, 2023 or as at March 31, 2022. The 2022 Plan is considered an "evergreen" plan, since Options which have been exercised, cancelled, terminated, surrendered, forfeited or expired without being exercised shall be available for subsequent grants under the 2022 Plan and the number of awards available to grant increases as the number of issued and outstanding Shares increases.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non- diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to 1,491,541 shares and which was subsequently further increased to allow up to 2,129,999 shares to be issued under the plan (the "2016 Plan"). Prior to the adoption of the 2016 Plan, the Company had adopted an incentive stock option plan (the "Plan"), whereby it could grant options to directors, officers, employees, and consultants of the Company.
The Company had the following incentive stock options granted under the 2022 Plan, the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2023:
Exercise | Balance | Forfeited | Balance | ||||||||||||||||
Expiry Date | Price | March 31, 2022 | Granted | Exercised | or Expired | March 31, 2023 | |||||||||||||
May 26, 2022 | CDN | $ | 5.25 | 5,357 | - | - | (5,357 | ) | - | ||||||||||
December 18, 2022 | CDN | $ | 3.15 | 14,286 | - | - | (14,286 | ) | - | ||||||||||
May 4, 2023 | CDN | $ | 3.50 | 68,571 | - | (2,857 | ) | (8,570 | ) | 57,144 | |||||||||
November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | - | - | 50,000 | |||||||||||
February 12, 2024 | CDN | $ | 3.50 | 73,214 | - | - | (1,427 | ) | 71,787 | ||||||||||
January 30, 2025 | CDN | $ | 2.59 | 281,787 | - | (465 | ) | (26,682 | ) | 254,640 | |||||||||
February 11, 2025 | CDN | $ | 8.32 | 50,000 | - | - | - | 50,000 | |||||||||||
July 3, 2025 | CDN | $ | 4.90 | 41,787 | - | - | (25,716 | ) | 16,071 | ||||||||||
November 19, 2025 | US | $ | 20.00 | 300,000 | - | - | - | 300,000 | |||||||||||
December 4, 2025 | US | $ | 20.00 | 20,000 | - | - | - | 20,000 | |||||||||||
May 18, 2026 | CDN | $ | 19.62 | 139,650 | - | - | (66,375 | ) | 73,275 | ||||||||||
December 10, 2026 | CDN | $ | 16.45 | 658,000 | - | - | (104,500 | ) | 553,500 | ||||||||||
July 4, 2027 | CDN | $ | 4.25 | - | 15,000 | - | - | 15,000 | |||||||||||
November 2, 2027 | US | $ | 2.46 | - | 60,000 | - | (50,000 | ) | 10,000 | ||||||||||
February 14, 2028 | CDN | $ | 3.80 | - | 660,000 | - | (15,000 | ) | 645,000 | ||||||||||
March 28, 2028 | CDN | $ | 2.85 | - | 100,000 | - | - | 100,000 | |||||||||||
Total outstanding | 1,702,652 | 835,000 | (3,322 | ) | (317,913 | ) | 2,216,417 | ||||||||||||
Total exercisable | 700,957 | 1,265,128 | |||||||||||||||||
Weighted Average | |||||||||||||||||||
Exercise Price (CDN$) | $ | 12.94 | $ | 3.66 | $ | 3.37 | $ | 11.16 | $ | 10.72 | |||||||||
Weighted Average Remaining Life | 3.5 years | 3.4 years |
As at March 31, 2023, there were 255,246 stock options available for issuance under the 2023 and 2022 plan and 2,467,595 performance based awards available for issuance under the 2023 Plan and the 2022 Plan. During the year ended March 31, 2023, 317,913 options were forfeited or expired.
On July 4, 2022, the Company granted 15,000 options to an employee with a term of five years and an exercise price of CDN$4.25 per share which vest 25% after 4 months, and after years 1, 2, and 3.
On November 2, 2022, the Company granted 60,000 options to employees with a term of five years and an exercise price of US$2.46 per share which vest 25% after 4 months, and after years 1, 2, and 3.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
On February 14, 2023, the Company granted 660,000 options with a term of five years and an exercise price of CDN$3.80 per share, comprised of:
• 420,000 stock options to officers and directors which vest 25% after 4 months, and then 25% after six months, nine months and twelve months;
• 225,000 stock options to employees which vest 25% after 4 months, and then 25% after years 1, 2, and 3;
• 15,000 stock options to a consultant which vest 25% after 4 months, and then 25% after six months, nine months and twelve months;
On March 28, 2023 the Company granted 100,000 stock options to employees. The stock options have an exercise price of CDN$2.85 per share, a term of 5 years, and are exercisable after 4 months, and then 25% after years 1, 2, and 3.
During the year ended March 31, 2023, 3,322 common shares were issued pursuant to the exercise of stock options and 317,913 options were forfeited or expired.
During the year ended March 31, 2023, the Company incurred share-based compensation expense with a measured fair value of $3,645,893. The fair value of the options granted and vested were recorded as share- based payments on the Consolidated Statements of Operations.
Subsequent to the end of the reporting period:
• Between April 13, 2023 and May 1, 2023 the Company issued 42,858 common shares pursuant to the exercise of stock options at an exercise price of CDN$3.50 per share for gross proceeds of CDN$150,003.
• On May 4, 2023 14,286 stock options exercisable at CDN$3.50 per share expired unexercised.
• Between April 1 2023 and June 30, 2023, 74,761 stock options exercisable at a weighted average share price of $5.54 were forfeited.
As at March 31, 2023 and as at March 31, 2022 the Company had an outstanding warrant balance of nil.
Investing Activities
For the year ended March 31, 2023
See the Operations and Capital Resources sections above for a summary of the Company activities during the year ended March 31, 2023.
Off-Balance Sheet Arrangements
As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Related Party Transactions
A summary of compensation for directors, officers and key management personnel is as follows:
For the Years Ended | |||||||||
March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
Salaries and Benefits (1) | $ | 580,774 | $ | 575,255 | $ | 473,841 | |||
Consulting fees (2) | 396,250 | 396,456 | 251,007 | ||||||
Non-cash Options Vested (3) | 2,100,717 | 3,242,528 | 1,698,487 | ||||||
Accommodation and Rentals (4) | - | - | 5,749 | ||||||
Total | $ | 3,077,741 | $ | 4,214,239 | $ | 2,429,084 |
1) Salaries and benefits incurred with directors and officers are included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss.
2) Consulting fees included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss are paid to the Chairman and CEO for management consulting services, and includes Director's Fees paid to GreenPower's four independent directors.
3) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.
4) Includes accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director, and truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director. These costs are expensed on the Consolidated Statements of Operations and Comprehensive Loss.
Accounts payable and accrued liabilities at March 31, 2023 included $208,215 (March 31, 2022 - $243,773) owed to officers, directors, and companies controlled by officers and directors, and shareholders, which is non-interest bearing, unsecured and has no fixed terms of repayment.
During the year ended March 31, 2023, the Company received loans totaling CAD$3,670,000 and US$25,000 from a company that is beneficially owned by the CEO and Chairman of the Company, and CAD$250,000 was loaned to the Company from a company beneficially owned by a Director of the Company. The loans bear interest at 12.0% per annum plus such additional bonus interest, if any, as may be agreed to and approved by GreenPower's Board of Directors at a later date. The loans from a company that is beneficially owned by the CEO and Chairman of the Company matured on March 31, 2023, and the loan from a company beneficially owned by a Director of the Company was repaid during June 2023.
The Company has agreed to grant the lenders a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to any security assignment of senior lenders. A director of the Company and the Company's CEO and Chairman have each provided personal guarantees of $2,510,000, or $5,020,000 in total to support the Company's $8 million operating line of credit. In consideration for these guarantees, in June 2018 the Company issued 628,571 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.55 per share and in March 2019 the Company issued 685,714 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.20 per share. During the year ended March 31, 2022 the director of the Company and the Company's CEO and Chairman exercised all of these warrants for 1,314,285 common shares of the Company.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
New and Amended Standards
Adoption of accounting standards
Certain new accounting standards have been published by the IASB or the IFRS Interpretations Committee that are effective for annual reporting periods beginning on or after January 1, 2022. These changes were reviewed by management and did not cause a change to the Company's financial statements.
Future accounting pronouncements
Certain new accounting standards and interpretations have been published by the IASB that are not mandatory for the March 31, 2023 reporting period, as summarized in the following table:
Mandatorily effective for periods beginning on or after January 1, 2023 | Mandatorily effective for periods beginning on or after January 1, 2024 |
IFRS 17 - Insurance Contracts | IFRS 16 - Leases (liability in a sale and leaseback) |
IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 (Disclosure of Accounting Policies) | IAS 1 - Presentation of Financial Statements (classification of liabilities as current or non current) |
IAS 8 - Accounting policies, Changes in Accounting Estimates and Errors (Definition of Accounting Estimates) | IAS 1 - Presentation of Financial Statements (Non current liabilities with covenants) |
IAS 12 - Income taxes (Deferred tax related to assets and liabilities arising from a single transaction) |
The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.
Internal Controls over Financial Reporting
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining disclosure controls and procedures (DC&P) (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the U.S. Securities and Exchange Act of 1934 and under National Instrument 52-109). Management evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023.
Based on the evaluation performed as of March 31, 2023, as a result of the material weaknesses in internal control over financial reporting that are described below in Management's Report on Internal Control Over Financial Reporting, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were not effective as of such date.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the U.S. Securities and Exchange Act of 1934 and under National Instrument 52-109.
The Company acquired Lion Truck Body Inc. ("Lion") effective July 7, 2022. The financial information for this acquisition is included in this MD&A and in Note 21 to the annual consolidated financial statements. Since the date of the acquisition to March 31, 2023 Lion contributed $1,897,605 in revenue and its impact to consolidated earnings for the period was ($864,996), including a writedown of $250,832 in goodwill that was recorded on the acquisition. National Instrument 52-109 and the U.S. Securities and Exchange Commission provide an exemption whereby companies undergoing acquisitions can exclude the acquired business in the year of acquisition from the scope of testing and assessment of design and operational effectiveness of controls over financial reporting. Due to the complexity associated with assessing internal controls during integration of the business, the Company has utilized the scope exemption as it relates to this acquisition in its management report on internal controls over financial reporting for the year ended March 31, 2023.
A company's internal control over financial reporting is a process designed by, or under the supervision of, its Chief Executive Officer and Chief Financial Officer, and effected by such company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023, based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2023 due to the following material weaknesses in its internal control over financial reporting:
• We did not design and maintain effective controls over revenues or the bank reconciliation process.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
• We did not design and maintain effective controls to account for transactions related to inventory and capital asset and to ensure that transactions were recorded in the correct period.
• We did not design and maintain effective controls over the accounting treatment relating to complex transactions and for business combinations.
Accordingly, management has concluded that these control deficiencies constitute material weaknesses
Remediation Efforts
Management is focused on developing, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses we identified. Our internal control remediation efforts include the following:
• We are improving internal controls and processes over revenue and the bank reconciliation process
• We are designing and implementing controls to account for transactions related to inventory and capital assets and to ensure that transactions were recorded in the correct period.
• We have retained an external financial controls consultant to assist (i) reviewing our current processes, procedures, and systems and assessing the design of controls to identify opportunities to enhance the design of controls that would address relevant risks identified by management, and (ii) enhancing and implementing protocols to retain sufficient documentary evidence of operating effectiveness of such controls;
• We are in the process of hiring additional qualified accounting resources and professionals to manage the implementation of improved internal controls over financial reporting;
In preparing our consolidated financial statements as of March 31, 2022 and 2021 and for the fiscal years ended March 31, 2022, 2021 and 2020, a material weakness was identified in our control environment related to errors that were made in determining the components of revenue and cost of sales at lease inception for leases that were determined to be finance leases, and in the calculation of revenue and cost of sales associated with cancelled leases. We corrected these errors and restated the presentation of revenue and cost of sales in our consolidated revenue and cost of sales in the consolidated statements of operations for the years ended March 31, 2021 and 2020. Management has taken steps to ensure the control deficiencies contributing to the material weakness will be remediated, including hiring of additional financial reporting and accounting staff, however management identified that as at March 31, 2023 a material weakness existed in that we did not design and maintain effective controls over the accounting treatment relating to complex transactions and for business combinations, which indicates this material weakness has not been remediated as at March 31, 2023.
Management intends to focus on the internal control remediation efforts identified above in order to address and resolve the material weaknesses in internal controls over financial reporting that existed as at March 31, 2023.
Attestation Report of the Registered Public Accounting Firm
This MD&A does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management's report in this Annual Report.
Changes In Internal Control Over Financial Reporting
During our fourth quarter and year ended ended March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act and NI 52-109) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Limitation on Effectiveness Controls and Procedures
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and
operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.
Critical Accounting Estimates and Judgements
In preparing our consolidated financial statements, management is required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to critical accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
i. The determination of the functional currency of the Company and of each entity within the consolidated Company.
ii. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern.
Critical accounting estimates and assumptions
i. The determination of the discount rates used to discount the promissory note receivable, term loan, the deferred benefit of government assistance, finance lease receivables and lease liabilities
ii. The estimated accrual rate for the warranty provision on the sale of all-electric vehicles
iii. The classification of leases as either financial leases or operating leases
iv. The determination that the Company is not involved in any legal matters that require a provision
v. The determination of an allowance for doubtful accounts on the Company's trade receivables
vi. The valuation of tangible assets and financial liabilities acquired in the Lion Truck Body (LTB) Inc. transaction and the determination that $250,832 in goodwill from the acquisition of Lion Truck Body Inc. was impaired as at March 31, 2023, and was written off
vii. The estimate of the useful life of equipment
viii. The estimate of the net realizable value of inventory
ix. The estimated value of the deferred benefit of government assistance
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
x. Estimates underlying the recognition of proceeds from government vouchers and grants
xi. Estimates underlying the determination of the carrying value of the West Virginia lease liability and right of use asset
xii. Estimates underlying the calculation of deferred income tax assets and deferred income tax recovery
xiii. The determination of overheads to be allocated to inventory and charged to cost of sales
Financial Instruments
The Company's financial instruments financial instruments consist of cash, accounts receivable, promissory note receivable, finance lease receivables, line of credit, loans payable to related parties, term loan, accounts payable and accrued liabilities, other liabilities, and lease liabilities.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1:Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2:Inputs other than quoted prices that are observable for the asset or liabilities either directly or indirectly; and
Level 3:Inputs that are not based on observable market data
The fair value of the Company's financial instruments approximates their carrying value, unless otherwise noted.
Credit risk
The Company's exposure to credit risk is on its cash, accounts receivable, promissory note receivable, and on its finance lease receivables. The maximum exposure to credit risk is their carrying amounts in the consolidated statement of Financial Position.
Cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its account receivable, finance lease receivables and promissory note receivable at each reporting period end and on an annual basis. As at March 31, 2023 the Company recognized an allowance for credit losses of $139,370 (2022 - $44,579) against its accounts receivable. During the year ended March 31, 2023 the Company recognized an impairment of nil on accounts receivable related to finance lease receivables (2022 - $43,261).
The following table provides a continuity of allowance for doubtful accounts on accounts receivable:
March 31, 2023 | March 31, 2022 | |||||
Allowance for doubtful accounts, beginning of year | $ | 44,579 | $ | 35,639 | ||
plus: new allowance recognized | 139,370 | 44,579 | ||||
less: allowance collected | (44,579 | ) | (35,639 | ) | ||
Allowance for doubtful accounts, end of year | $ | 139,370 | $ | 44,579 |
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Liquidity risk
The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's cash balances and available liquidity on the Company's $8 million operating line of credit. The Company's cash is invested in bank accounts at major financial institutions in Canada and the United States and is available on demand. The continuation of the Company as a going concern is dependent on future cash flows from operations including the successful sale and manufacture of electric vehicles to achieve a profitable level of operations and obtaining necessary financing to fund ongoing operations. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.
The following table summarizes the Company's financial commitments by maturity as at March 31, 2023:
March 31, 2023 | Less than 3 months | 3 to 12 months | One to five years | Thereafter | ||||||||
Line of credit (Note 1) | $ | 6,612,232 | $ | - | $ | - | $ | - | ||||
Accounts payable and accrued liabilities | 7,316,267 | - | - | - | ||||||||
Loans payable to related parties | 3,287,645 | - | - | - | ||||||||
Lease liabilities | 272,919 | 771,097 | 3,336,500 | 3,100,000 | ||||||||
Term loan | 7,246 | 21,835 | 163,594 | 1,309,463 | ||||||||
Other liabilities | 2,142 | 6,425 | 25,700 | - | ||||||||
$ | 17,498,451 | $ | 799,357 | $ | 3,525,794 | $ | 4,409,463 | |||||
(1) GreenPower's operating line of credit with the Bank of Montreal is repayable on demand and is therefore recorded as a current liability with less than 3 months to maturity. GreenPower remains in compliance with the financial covenant under the facility and since inception of the loan the Bank of Montreal has not demanded repayment of the facility, however there is no guarantee that the Bank of Montreal will not do so in the future. |
As part of the acquisition of Lion Truck Body Inc. that closed on July 7, 2022, the Company agreed to assume a term loan from the seller, with principal outstanding of approximately of approximately $1.5 million as at July 7, 2022, an interest rate of 3.75%, a maturity in May 2050, and fixed monthly payments
Market risks
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange. The Company is exposed to interest rate risk with respect to its Line of Credit. The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada. Management monitors its foreign currency balances, but the Company does not engage in any hedging activities to reduce its foreign currency risk.
At March 31, 2023, the Company was exposed to currency risk through the following financial assets and liabilities in CDN Dollars.
Cash | $ | 138,869 | |
Accounts Receivable | $ | 89,944 | |
Sales tax receivable | $ | 42,526 | |
Prepaids and deposits | $ | 10,988 | |
Finance Lease Receivable | $ | 82,000 | |
Accounts Payable and Accrued Liabilities | $ | (410,321 | ) |
Related Party Loan & Interests Payable | $ | (4,242,071 | ) |
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
The CDN/USD exchange rate as at March 31, 2023 was $0.7389 (March 31, 2022 - $0.8003). Based on the net exposure and assuming all other variables remain constant, a 10% change in the appreciation or depreciation of the Canadian dollar relative to the US dollar would result in a change of approximately $428,000 to other comprehensive income/loss.
Outlook
For the immediate future, the Company intends to:
• Complete production and delivery of several models of EV Stars and BEAST school buses currently in various stages of production;
• Deliver the remaining vehicles in finished goods inventory;
• Train and hire employees and develop its capacity at the West Virginia school bus manufacturing facility in order to begin production of all-electric school buses;
• Continue to develop and expand its dealer network in order to generate new sales opportunities and increase sales backlog;
• Further develop its sales and marketing, engineering and technical resources and capabilities.
Capitalization and Outstanding Security Data
The total number of common shares issued and outstanding is 24,716,628 as of March 31, 2023. There are no preferred shares issued and outstanding.
An incentive stock option plan was established for the benefit of directors, officers, employees and consultants of the Company. As of March 31, 2023, there are 2,216,417 options outstanding, and the total number of common share warrants outstanding as of the same date is nil.
As at July 14, 2023 the Company had 24,948,305 issued shares, 2,084,512 options outstanding, and nil warrants outstanding.
Risk Factors
Investing in the common shares of the Company involves risk. Prospective investors should carefully consider the risks described below, together with all of the other information included in this MD&A before making an investment decision. If any of the following risks actually occurs, the business, financial condition or results of operations of the Company could be harmed. In such an event, the trading price of the common shares could decline and prospective investors may lose part or all of their investment.
Operational Risk
The Company is exposed to many types of operational risks that affect all companies. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and/or systems. Operational risk is present in all of the Company's business activities, and incorporates exposure relating to fiduciary breaches, product liability claims, product recalls, regulatory compliance failures, legal disputes, business disruption, technology failures, business integration, damage to physical assets, employee safety, dependence on suppliers, foreign exchange fluctuations, insurance coverage and rising insurance costs. Such risks also include the risk of misconduct, theft or fraud by employees or others, unauthorized transactions by employees, operational or human error or not having sufficient levels or quality of staffing resources to successfully achieve the Company's strategic or operational objectives. The occurrence of an event caused by an operational risk that is material could have a material adverse effect on the Company's business, financial condition, liquidity and operating results.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Reliance on Management
The Company is relying solely on the past business success of its directors and officers. The success of the Company is dependent upon the efforts and abilities of its directors, officers and employees. The loss of any of its directors, officers or employees could have a material adverse effect upon the business and prospects of the Company.
Competition in the industry
The Company faces competition from a number of existing manufacturers of all-electric medium and heavy-duty vehicles and buses, as well as manufacturers of traditional medium and heavy-duty vehicles. The Company competes in the zero-emission, or alternative fuel segment of this market. Several of the company's competitors, both publicly listed and privately owned, have raised or have access to a significant amount of capital to invest in the growth and development of their businesses which has increased the competitive threat from several well-capitalized competitors. In addition to existing competitors in various market segments, there is the potential for future competitors to enter the market.
No Dividend Payment History
The Company has not paid any dividends and may not produce earnings or pay dividends in the immediate or foreseeable future.
Reliance on Key Suppliers
Our products contain numerous purchased parts which we source globally directly from suppliers, some of which are single-source suppliers, although we attempt to qualify and obtain components from multiple sources whenever feasible. Any significant increases in our production may require us to procure additional components in a short amount of time, and in the past we have also replaced certain suppliers because of their failure to provide components that met our quality control standards or our timing requirements. There is no assurance that we will be able to secure additional or alternate sources of supply for our components or develop our own replacements in a timely manner, if at all. If we encounter unexpected difficulties with key suppliers, and if we are unable to fill these needs from other suppliers, we could experience production delays and potential loss of access to important technology and parts for producing, servicing and supporting our products.
Provision for Warranty Costs
The Company offers warranties on the medium and heavy duty vehicles and buses it sells. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest past cost information may differ from future claims. Factors that could impact future warranty claims include the success of the Company's productivity and quality initiatives as well as parts and labour costs. Actual warranty expense could differ from the provisions which are estimated by management, and these differences could be material and may negatively impact the company's financial results and financial position.
Sales, Marketing, Government Grants and Subsidies
Presently, the initial price of the Company's products are higher than a traditional diesel bus and certain grants and subsidies are available to offset these higher prices. These grants and subsidies include but are not limited to the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ("HVIP") from the California Air Resources Board ("CARB") in partnership with Calstart, the Specialty-Use Vehicle Incentive Program funded by the Province of British Columbia, Canada, the clean trucks NYSERDA program and the New York Voucher Incentive Program in the state of New York, the South Coast AQMD funding in California, Federal Transit Authority funding for eligible transit properties across the US, and VW Mitigation Trust Funds allocated to programs throughout the US. The ability for potential purchasers to receive funding from these programs is subject to the risk of the programs being funded by governments, and the risk of the delay in the timing of advancing funds to the specific programs. To the extent that program funding is not approved, or if the funding is approved but timing of advancing of funds is delayed, subject to cancellation, or is otherwise uncertain, this could have a material adverse effect on our business, financial condition, operating results and prospects.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
Current requirements and regulations may change or become more onerous
The Company's products must comply with local regulatory and safety requirements in order to be allowed to operate within the relevant jurisdiction or to qualify for funding. These requirements are subject to change and one regulatory environment is not indicative of another.
Litigation and Legal Proceedings
As of the date of this report the Company is not currently a party to any litigation or legal proceedings which are material, either individually or in the aggregate. The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a probable or estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non-payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company, and the Company is evaluating its response to this claim.
Reliance on Shipping
We rely on global shipping for vehicles that we produce at contract manufacturers, and for certain parts and components sourced from our global network of suppliers. We have experienced an increase in shipping costs and have experienced delays of deliveries of parts and components from our global suppliers, and on vehicles arriving from our contract manufacturers. While these delays and cost increases are not currently at a level that they have caused a material disruption or negative impact to our profitability, these delays and costs may increase to a point that they may negatively impact our financial results and ability to grow our business.
Events after the reporting period
Subsequent to the end of the reporting period:
• Between April 1, 2023 and April 17, 2023 the Company issued a total of 188,819 shares under the ATM program at a weighted average price of $2.7587 per share for gross proceeds of $520,892 before transaction fees.
• Between April 13, 2023 and May 1, 2023 the Company issued 42,858 common shares pursuant to the exercise of stock options at an exercise price of CDN$3.50 per share for gross proceeds of CDN$150,003.
• On May 4, 2023 14,286 stock options exercisable at CDN$3.50 per share expired unexercised.
• Between April 1 2023 and June 30, 2023, 74,761 stock options exercisable at a weighted average share price of $5.54 were forfeited.
• During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non-payment.
GreenPower Motor Company Inc. Management's Discussion and Analysis For the year ended March 31, 2023 Discussion dated: July 14, 2023 |
• On June 2, 2023, GreenPower repaid a CAD $250,000 promissory note, plus accrued and unpaid interest on the note, to a company that is beneficially owned by a Director of the Company.
Further information about the Company and its operations can be obtained from www.sedar.com
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Crowe MacKay LLP 1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687-4511 Fax +1 (604) 687-5805 www.crowemackay.ca |
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Forms F-10 (File No. 333-258099) and Form S-8 (No. 333-261422) of GreenPower Motor Company Inc. of our report dated June 30, 2022, relating to the consolidated financial statements, which is included in Report of Foreign Private Issuer on Form 6-K.
/s/ Crowe MacKay LLP
Chartered Professional Accountants
Vancouver, Canada
July 17, 2023
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Tel: (604) 688-5421 Fax: (604) 688-5132 www.bdo.ca |
BDO Canada LLP 1100 Royal Centre 1055 West Georgia Street, P.O. Box 11101 Vancouver, British Columbia V6E 3P3 |
Consent of Independent Registered Public Accounting Firm
GreenPower Motor Company Inc.
Vancouver, Canada
We hereby consent to the incorporation by reference in the Registration Statements on Form F-10 (File No. 333-258099) and Form S-8 (No. 333-261422) of GreenPower Motor Company Inc. of our report dated July 14, 2023 relating to the consolidated financial statements of GreenPower Motor Company Inc. appearing in this Current Report on Form 6-K dated July 17, 2023. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
/s/ BDO Canada LLP
Vancouver, Canada
July 17, 2023
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms
Form 52-109F1
Certification of Annual Filings
Full Certificate
I, Fraser Atkinson, Chief Executive Officer of GreenPower Motor Company Inc. certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of GreenPower Motor Company Inc. (the "issuer") for the financial year ended March 31, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control - Integrated Framework Issued by the Committee of Sponsoring Organization of the Treadway Commission in 2013.
5.2 ICFR - material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end
(a) a description of the material weakness;
(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and
(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.
5.3 Limitation on scope of design: N/A
6. Evaluation: The issuer's other certifying officer(s) and I have
(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and
(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A
(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and
(ii) for each material weakness relating to operation existing at the financial year end
(A) a description of the material weakness;
(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and
(C) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.
7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
8. Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.
Date: July 14, 2023
/s/ Fraser Atkinson | |||
Fraser Atkinson Chief Executive Officer |
Form 52-109F1
Certification of Annual Filings
Full Certificate
I, Michael Sieffert, Chief Financial Officer of GreenPower Motor Company Inc. certify the following:
1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of GreenPower Motor Company Inc. (the "issuer") for the financial year ended March 31, 2023.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and
(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control - Integrated Framework Issued by the Committee of Sponsoring Organization of the Treadway Commission in 2013.
5.2 ICFR - material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end
(a) a description of the material weakness;
(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and
(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.
5.3 Limitation on scope of design: N/A
6. Evaluation: The issuer's other certifying officer(s) and I have
(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and
(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A
(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and
(ii) for each material weakness relating to operation existing at the financial year end
(A) a description of the material weakness;
(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and
(C) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.
7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
8. Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.
Date: July 14, 2023
/s/ Michael Sieffert | |||
Michael Sieffert Chief Financial Officer |
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